Inflation in Spain fell again this month, helped by lower electricity and fuel prices. According to Spain’s statistics office, inflation was 5.8 percent year-on-year in December, up from 6.8 percent in November.
This means that inflation in the eurozone’s fourth largest economy has declined for five consecutive months. In July, Spanish inflation peaked at 10.7%. Spain’s central bank has warned that inflation will remain high for now and not fall to its 2% target until 2025. Average inflation rates of 4.9% and 3.6% are expected next year in 2024.
Support measures
To help people with high inflation, the Spanish government has implemented extensive support measures. This week it was announced that the government will allocate another ten billion euros next year to compensate citizens for high prices. The VAT on commonly sold foodstuffs such as bread, milk, vegetables and fruit will be reduced from four to zero per cent. The tax breaks on electricity and gas, which should have expired at the end of this year, will also remain in force for another six months.
Additionally, Prime Minister Pedro Sanchez announced direct financial aid for 4.2 million low-income families. They receive a one-time bonus of 200 euros. These measures apply for six months, if inflation falls below 5.5% before then, the support will be broken sooner.
Source: BNR
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