The end of the tax rebates on light and gas increases the cost of living for families
The prices of consumer goods and services rise in June by 0.6% compared to May and by 3.2% in a year
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 reductions 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 of growth five tenths higher than the increase recorded between May and April, according to consumer price index (CPI) data advanced this Monday by the National Institute of Statistics (INE). This acceleration was foreseen by both the authorities and economists precisely due to the end of the government's measures, which would normalize the electricity and gas bills paid by families and businesses.
Despite the increase compared to the previous month, this June the CPI stood at 3.2% above the levels of the same month last year, the same annual variation as recorded 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. The closure of ship traffic in the strategic Strait of Hormuz, which connects the Persian Gulf and the Indian Ocean and through which a fifth of the world's oil exports passed, also played a decisive role.
Fuel subsidies
With the normalization of the price of oil two months after the start of the war, the government presided over by Pedro Sánchez opted to eliminate the tax reductions applied to electricity and gas, although today it still maintains those that it also applied to fuels, both for private consumers and the 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 gradual withdrawal of the aid that is still in force from July 1. 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 stability confirms that the government's response plan continues to meet its objective" of alleviating the impact of the Persian Gulf conflict 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%.
Core inflation —which does not include volatile elements, such as energy or fresh food— has grown by 3% annually this month, two tenths more than the variation registered last month. The CPI data presented this Monday are an advance and the INE will expand them, also broken down by autonomous communities, on July 15.