January 2, 2023
The third big package of measures to combat inflation was unveiled by Spain on Tuesday, totaling 10 billion euros ($10.65 billion), increasing the total amount of aid provided since early 2022 to 45 billion euros.
Spain, like with other nations in Europe, has been struggling with a crisis brought on by rising costs of living as a result of the conflict in Ukraine.
According to Prime Minister Pedro Sanchez, the package comprises a one-time bonus of 200 euros for around 4.2 million households with annual salaries up to 27,000 euros and the prolongation of tax breaks for energy bills into the first half of 2019.
The announcements were made in March and June and included direct assistance, tax breaks, subsidized loans, and rental control measures.
The restrictions have had some success, along with a deal reached with the European Union to cap gas costs for electricity production. November saw the lowest 12-month inflation rate among the EU’s 27 member states, at 6.7%.
A significant drop in electricity prices, which fell by 22.4% from a year earlier in November, has helped to moderate inflation. However, the cost of food has persisted to hurt Spaniards’ budgets, rising 15% between October and November of last year.
According to the government, value added tax on staple items such bread, cheese, milk, fruit, vegetables, and cereals will be reduced from 4% to 0%. According to Sanchez, the VAT on pasta and cooking oils will be reduced by 50% to 5%.
Additionally, Sanchez declared limitations on rental increase and extensions of the commuter rail subsidy program of 12 months. The price of gasoline will no longer be discounted for consumers, with the exception of the haulage industry.
He said that the aid already given had enabled Spain to experience high economic growth this year, which he estimated to be over 5%, exceeding the prior official forecast of 4.4%.
Source: Reuters
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