The price rises are mainly caused by car rental companies having sold off much of their stock of vehicles during the pandemic as demand collapsed. Now, with people taking holidays again, they are trying to rebuild their fleets, but a global shortage of semi-conductors means they are paying more for new vehicles.
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You won't run out of things to see or places to stop. It just depends on what you want to do. Using public transportation between the larger cities should be fairly easy, but for the smaller towns a rental car is probably best since many of the really small places aren't regularly serviced by train or bus.
According to OECD data, the income per capita in Spain is 3.000 USD lower than the average OECD level (around € 28.800). Having a lower average salary, combined with an unemployment rate higher than the rest of Europe, makes it clearer why the current price levels are relatively low.
Use public transportation, but skip the tourist ticketPublic transportation in Spain is affordable, clean and as relatively reliable as anywhere else in the world. Whenever possible, opt for the bus or metro over a cab, but think twice before you buy that unlimited multiday pass.
Driving in Spain is generally very easy once you get used to driving on the right side of the road. All main roads are in good condition and well signposted, and the toll motorways are very quiet. Be careful if you go off the beaten track, however, as the quality of the roads and signage can vary considerably.