MADRID (Reuters) – Spain announced on Tuesday a third package of measures to fight inflation, worth 10 billion euros, bringing total aid to 45 billion euros since the start of the ‘year.
The measures include a bonus of 200 euros for around 4.2 million households whose annual income does not exceed 27,000 euros and the extension of tax reductions for energy bills to the first half of next year, a declared the president of the government Pedro Sanchez to the press.
The last government announcements dated back to March and June – direct aid, tax cuts, reduced-rate loans and rent controls.
These measures, together with a negotiated agreement with the European Union to limit gas prices for electricity generation, have proven effective: inflation calculated at European standards (HICP) in Spain reached 6.7% over one year in November against a peak of 10.7% in July. This is the lowest rate of the 27 countries of the European Union.
The slowdown in inflation was helped by a sharp drop in electricity prices, which fell 22.4% in November year on year. However, food prices continued to weigh down, with an increase of 15% in October and November compared to the previous year.
The government added that it would abolish VAT on basic foodstuffs such as bread, cheese, milk, fruit and vegetables and cereals, which was previously 4%. VAT on pasta and cooking oils will be halved and reduced to 5%, said Pedro Sanchez.
Madrid has also extended subsidies for train travel and limiting rent increases for 12 months. However, the rebate on the price of gasoline for households, excluding the road transport sector, will end.
According to Pedro Sanchez, the aid provided so far has enabled Spain to register strong economic growth this year, which he estimated at more than 5%, against an earlier forecast which put it at 4.4 %.
(Report David Latona and Belén Carreño, written by Charlie Devereux; French version Kate Entringer)
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