2023-09-28 09:20:53
Prices rise again in September, they do so for the third consecutive month and, above all, they increase due to the two variables that had most influenced the skyrocketing inflation since the war in Ukraine began: the cost of electricity and fuel . Once again, electricity and gasoline make citizens’ pockets tremble and raise the CPI level to 3.5% in September, according to data provided by the INE.
Inflation rises one step largely as expected when compared to last year’s levels. Around this time, prices were beginning to be contained after the measures included in various public aid packages. Prices were now expected to rise at their interannual rate, although they have done so at a rate of almost one percentage point in a single month from the 2.6% at which it closed in August; 2.3% in July; or 1.9% in June, a kind of mirage precisely because of that effect compared to last year.
The main cause of this situation is electricity prices. September is about to close with an average cost of electricity in the generation market that far exceeds 100 euros/MWh. It has done so silently, little by little, due to the lack of rain that could activate the hydroelectric plants and the need to use gas combined cycle plants, a raw material that is also increasing in recent weeks.
The other component that decisively affects prices is fuel. The average price of fuel has continued its rise and has chained its eleventh consecutive week of increases, accumulating an increase of up to 16% since the start of summer. Specifically, gasoline has become more expensive to 1,751 euros per liter, its maximum value so far in 2023 and the highest since the end of November, although the subsidy of 20 cents per liter implemented by the Government for the crisis due to the war in Ukraine that helped alleviate that amount. For its part, the average price of diesel has also chained eleven consecutive weeks of increases to reach 1,668 euros per liter, a level that has not been reached since early February, according to data from the European Union Petroleum Bulletin.
In the case of underlying inflation, which excludes energy products and unprocessed foods, and which marks the daily purchases of citizens, its rate has moderated by three tenths to 5.8%. For the Government, this data shows “the lowest rate since June of last year” and anticipates a moderation in prices in the coming months.
Pressure until December 31
The Government has come face to face with an unexpected enemy that could greatly complicate the decision on the extension of the latest anti-crisis plan which, among others, contains measures such as the reduction of VAT on food and the reduction of invoice taxes. electricity of consumers. Although the possibility of eliminating or modifying some of the aid that expires on December 31 was on the Executive’s table, the recent rise in the price of some raw materials such as oil or natural gas has put the justification for this withdrawal in check. .
The Government has already made it clear that the extension is not yet defined and that the budget plan – on which the subsidy of the last resort rate for natural gas (TUR) also depends – is still in the process of formulation. So everything will depend on how these external factors evolve that can further complicate the day-to-day life of Spanish households.
The economic vice president herself, Nadia Calviño, has recently indicated that “we are going to continue along the same lines as until now, taking the appropriate decisions to cushion the impact of the inflation crisis.” Of course, she made it clear that she will always act “thinking about a responsible fiscal policy and the best use of public resources.”
Governor Pablo Hernández de Cos has also recently insisted that euro zone governments “must reverse their support measures.” Something he considered “essential” to avoid additional pressures on prices “that would otherwise require an even stronger monetary policy response.” That is, either economies accelerate the adjustment of the deficit through more restrictive fiscal policies – eliminating aid, for example – or interest rates will remain high or even rise to control inflation.
#Inflation #escalates #due #electricity #fuel #uncertainty #aid