• Tue. May 28th, 2024

Soaring Inflation in Spain: Causes, Consequences, and Uncertainty

BySamantha Nguyen

Mar 27, 2024
Spain’s Inflation Reaches 3.2% in March as VAT Returns to 21% after Three-Year Absence

In March, the inflation rate in Spain increased to 3.2% year-on-year, a significant jump from the previous month. This was driven by the end of tax cuts on electricity and the return to a 21% VAT rate. This marked a substantial rise in prices compared to February when they were 2.8% higher year-on-year.

Since the beginning of the year, prices have been on an upward trend, with an increase of 0.1% in January, 0.4% in February, and 0.8% in March. This is the largest increase since February 2023. The underlying inflation also rose by 0.5% in monthly terms.

Provisional data released by the National Institute of Statistics suggests that core inflation, which excludes fresh food and energy products, will be moderated to 3.3%, the lowest rate in the last two years. This is a drop from 3.5% in February and the first time since 2022 that core inflation is above the general index.

The increase in prices can be attributed to several factors, including the restoration of normal VAT rates on electricity and gasoline as well as services like transport and housing maintenance driving price increases along with certain food products like olive oil and meat products such as beef or pork due to supply chain disruptions caused by extreme weather conditions or animal health issues.

Food prices in March rose less than they did in the same month last year due to various factors like increased production capacity, improved logistics and supply chain management.

Overall, despite expectations for an increase in prices due to government policies such as tax cuts ending or VAT rates increasing, experts warn of potential inflationary pressures across various sectors particularly services like education or healthcare that are experiencing labor shortages.

By Samantha Nguyen

As a content writer at newsqwe.com, I am passionate about crafting engaging and informative articles that captivate our audience. With a background in journalism and a keen eye for detail, I strive to deliver content that is not only well-researched but also adds value to our readers' lives. From breaking news stories to in-depth features, I take pride in my ability to tell compelling stories that resonate with our diverse audience. When I'm not typing away at my keyboard, you can find me exploring new cafes, practicing yoga, or getting lost in a good book. I am thrilled to be a part of the newsqwe.com team and look forward to sharing my love for writing with all of our readers.

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