Inflation in Spain: bread, cheese, milk, vegetables… the government skips VAT on basic necessities

Spain announced on Tuesday a third package of anti-inflation measures worth 10 billion euros, bringing total aid to 45 billion euros since the start of the year.

As in France, the Spanish government is expanding measures to fight inflation.

The support now includes a €200 bonus for around 4.2 million households with an annual income of no more than €27,000 and the extension of tax breaks for energy bills until the first half of next year, Prime Minister Pedro Sanchez told reporters.

The last government announcements dated back to March and June – direct support, tax cuts, reduced loans and rent controls.

These measures, combined with a negotiated agreement with the EU to cap gas prices for power generation, have proven effective: inflation calculated by European standards (HICP) in Spain reached 6.7% over the year in November, against a peak of 10.7% in July . This is the lowest rate of the 27 countries in the European Union.

Abolition of VAT

The decline in inflation was helped by a sharp fall in electricity prices, which fell 22.4% in November year-on-year. However, food prices continued to weigh on with an increase of 15% in October and November compared to the previous year.

The government added that it would abolish VAT on basic foods 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%, Pedro Sanchez said.

Madrid has also extended subsidies for train travel and restrictions on rent increases for 12 months. However, the discount on the price of petrol for households, excluding the road transport sector, ends.

According to Pedro Sanchez, the aid provided so far has enabled Spain to record strong economic growth this year, which he estimated at more than 5%, against an earlier forecast that put it at 4.4%.

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