The end of tax rebates on electricity and gas bills increases the cost of living for families

BarcelonaThe cost of living in Spain remains high this June. The prices of goods and services consumed by families have accelerated their growth, mainly due to the end of tax rebates on electricity and gas that the Spanish government had approved last March and which expired from June 1st.

Thus, the set of products and services consumed by Spanish families has grown by 0.6% this month compared to May, an acceleration in growth five tenths higher than the increase recorded between May and April, according to data from the consumer price index (CPI) advanced this Monday by the National Statistics Institute (INE). This acceleration was foreseen by both authorities and economists precisely because of the end of government measures, which would normalize the electricity and gas bills paid by families and businesses.

Despite the increase compared to the previous month, the CPI in June stood 3.2% above the levels of the same month last year, the same annual variation as registered in May. Spain thus maintains an annual inflation rate that far exceeds the 2% barrier set by the European Central Bank (ECB) in the medium and long term.

Electricity and gas are the two elements that are growing the most in the entire basket of products and services that make up the CPI, precisely because electricity and gas bills are once again incorporating all the taxes that the government had temporarily eliminated or reduced with the intention of reducing the increase in the cost of these basic services. With the attack by the United States and Israel on Iran and the expansion of the war to other Middle Eastern countries, the price of natural gas and oil soared, which directly impacts the cost of electricity upwards.

With the normalization of the price of oil two months later, the government opted to eliminate the fiscal rebates applied to electricity and gas, although it maintains those it also applied to fuels, both for private consumers and additional ones for professionals in sectors affected by the increase in gasoline and diesel, such as transporters or farmers. This Monday, the council of ministers will approve the maintenance of aid that is still in force from July 1st. Precisely, according to the INE, fuels are one of the elements whose price has decreased the most compared to a year ago.

In a statement sent to the media, the Ministry of Economy has boasted that year-on-year inflation has stabilized: "this stabilization confirms that the government's response plan continues to meet its objective" of alleviating the impact of the conflict in the Persian Gulf on prices and "protecting the purchasing power of households". The executive calculates that the package of measures approved in March has cut the rise in the CPI by one percentage point, meaning that the annual rate would stand at 4.2% this month instead of 3.2%.