Fuels shoot inflation to the maximum since 2023
The cost of living for Catalan families increased by 4% annually in the month of August
BarcelonaThe cost of living for families continues to rise due to the increase in energy prices. In August, the prices of the set of consumer goods and services in Catalonia soared by 4% annually, the highest figure since January 2023 but lower than the Spanish average, according to data from the Consumer Price Index (CPI) published this Tuesday by the National Statistics Institute (INE).
Compared to the previous month, price growth in Catalonia was 0.6%, one tenth of a percentage point less than the increase recorded in Spain. Nationwide, annual inflation stood at 4.3%, as the INE had already anticipated three weeks ago.
The main reason to explain the price rise of the last year is the conflict in the Middle East that began last February. The attacks by the United States and Israel on Iran, one of the world's main oil producers, and the response of the Ayatollah regime attacking American allies in the region have reduced the production of crude oil and natural gas globally. To this, one must add the blockade of the Strait of Hormuz, through which a fifth of the world's oil tankers pass and which Tehran has closed since February, thus preventing the outflow of oil.
To address the energy price shock, during the spring the Spanish government approved a package of fiscal measures to mitigate the effects of inflation on families and on the most affected sectors, such as farmers or transporters. These measures, however, have been declining over the months and currently only those designed for professionals and the reduction of the special tax on hydrocarbons (IEH) which as of September 1st was extended to 20 cents per liter.
The Spanish government must decide this month of September whether, in light of this scenario, it will maintain fuel subsidies and approve a new royal decree-law (the current one ends at the end of the month). Both the President of the Spanish government, Pedro Sánchez, and the Minister of Economy, Carlos Cuerpo, have wanted to send a message of reassurance, guaranteeing that they will continue to help families and companies in a context of tension and volatility in the global energy market, reports Núria Rius Montaner.
"We will not stop accompanying and supporting families in the face of the price hikes," the minister indicated in a statement. This month of September, the tax on hydrocarbons applied to diesel maintains the 20-cent reduction per liter. On the other hand, the aid for the tax on gasoline has dropped from 10 to 5 cents per liter.
Both the Spanish and Catalan figures place the inflation rate at levels that, at a minimum, double the 2% medium-term target set by the European Central Bank (ECB). In this sense, the rising cost of living is a generalized fact in the rest of Europe, even more so than in Spain, since the majority of countries in the European Union have a greater dependence on energy coming from the Middle East.
To try to curb price increases, last week the ECB raised the basic interest rates by a quarter of a percentage point, to 2.5%. Despite this, since the cause of inflation is an increase in energy costs caused by an external shock—the conflict in the Middle East—the central bank's room for maneuver is limited, as continuing to increase the price of money could slow down economic growth, which is already quite limited across the eurozone as a whole.
Fuel, through the roof
The rise in fuel prices is the element that consumers notice most in their pockets. Between July and August, fuel prices in Catalonia increased by 7.5% and stood 18.3% above the prices of August 2024.