Yeah this confused me until I figured it out! This happens because the line height of the text is greater than 1.0. To fix it:
- make sure the document’s Format Bar is shown (menu: Format > Show Format Bar)
- select the image with the text selection tool: click after the image then hold shift-key down and press the back arrow until it is selected (the image itself doesn’t highlight when selected like this, but you can see the empty space above it highlight)
- in the Format Bar, at the top of the document window, click on the Line and Paragraph spacing pulldown menu (the second from the right) and select “1.0”
