Inflation is breaking records in Spain, reaching 9.8% in March, a record for thirty-seven years. A situation caused by the explosion of energy prices, a consequence of the war in Ukraine.
This level had not been reached “since May 1985”, according to the Spanish National Institute of Statistics (INE). A rate up two points compared to February. A strong increase which is explained by the surge in the prices of electricity, fuels but also food products, although Spain is not very dependent on Russian gas and does not have much trade with Moscow.
Inflation which “affects our economy, our society, and in particular the most vulnerable groups”, declared Spanish Prime Minister Pedro Sanchez before the Chamber of Deputies on Wednesday.
The Spanish Ministry of Economy therefore affirmed that it was “urgent to deploy the national response plan adopted [mardi]which will reverse this upward trend, curb rising costs for businesses and families and begin to bring inflation down to more moderate levels in the short term,” reports the Spanish daily La Vanguardia.
A similar situation throughout Europe
This direct aid plan is estimated at more than 6 billion euros and concerns households and businesses. It includes in particular a subsidy of 20 euro cents on fuel, and a 15% increase in the minimum subsistence income, paid to the poorest families. The reduction in taxes in force since last summer is also extended until June 30.
“We are convinced that this national response plan, as well as the agreement reached in Brussels to set a reference price for gas (…) will allow us in the near future to bend the curve” of inflation “and to stabilize the evolution of the cost of living”, assured Pedro Sanchez.
The war in Ukraine also has consequences for other European countries. Inflation in Germany soared to 7.3% in March, the highest since 1981.
Christine Lagarde, director of the European Central Bank, warned on Wednesday that inflation would continue to rise as long as the conflict in Ukraine was prolonged, increasing the cost of living, and above all of energy: “It is clear that the longer the war lasts, the greater the economic costs and the greater the likelihood of an unfavorable outlook. (…) With an appropriate political response, we can mitigate the economic consequences of the war and manage the high levels of uncertainty that we face”, she however estimated.