SPAIN’S annual inflation rate fell to 3.2% in April, down by 0.2.% on the March figure, according to the National Statistics Institute (INE).
The INE said on Wednesday that the fall is down to lower electricity bills and tax cuts introduced by Spain’s government in the wake of the Iran war.
At the end of March – the month in which inflation rebounded to 3.4% – the government approved a series of tax cuts on electricity, gas and fuels to counter price rises.
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Core inflation – excluding unprocessed food and energy products – fell by one tenth, to 2.8%; while on a month to month comparison, prices rose by 0.4% compared to March.
The Minister of Economy commented that April’s general inflation rate fall was mainly down to a drop in electricity bills.
Carlos Cuerpo said: “Spain is, since the beginning of the conflict, the third country in Europe where prices in the wholesale electricity market have grown the least.”
“This demonstrates the additional element of energy sovereignty and protection that the current energy mix in Spain entails and the high presence of renewables,” he added.
“Fuels continue to be the product that is pushing up inflation, reflecting the persistence of the external shock resulting from the war in Iran.”
“Its impact is offset by the behaviour of electricity and by the fiscal measures approved by the Government,” Cuerpo concluded.
The plan approved by the Government at the end of March includes a reduction in VAT on fuels to 10% and the special tax on hydrocarbons ‘to the minimum allowed by the European Union’, which will mean savings of up to 30 cents per litre, about €20 per tank per average car.
Electricity taxes have also been cut: VAT has been reduced from the general rate to the reduced rate (10%), the tax on electricity production – 7%, paid by companies – is suspended and the special electricity tax is reduced from 5.11% to 0.5%.
In addition, VAT on natural gas, pellets and firewood has been reduced to 10%, while butane and propane prices are frozen and electricity tolls are subsidized by 80% for the most exposed industries.
“The response plan approved in Congress and in force since March 20 is fulfilling its main objective: that the external shock of the war is not permanently transferred to either inflation or the purchasing power of households,” according to the Economy Ministry.
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