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Rising Inflation in Spain: How Tax Cuts and VAT Changes are Affecting Prices

BySamantha Jones

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

In March, the annual inflation rate in Spain reached 3.2%, a significant increase from the previous month’s 2.8%. This rise was caused by several factors, including the end of tax cuts on electricity and the reinstatement of a 21% VAT rate. As a result, prices surged compared to February.

The monthly price evolution has been on an upward trend since January, with prices rising by 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, with provisional data suggesting that it will moderate to 3.3% for the year, which is below the general index but above core inflation that excludes fresh food and energy products.

Despite this moderation in underlying inflation, food prices still rose less than they did in March of last year due to various factors such as services and certain food products like olive oil driving price increases.

The increase in prices has raised concerns among experts about potential inflationary pressures in various sectors, particularly services.

Overall, while the inflation rate exceeded expectations in March and core inflation was higher than general index for some months this year, experts warn that continued monitoring of market conditions is necessary to ensure price stability going forward.

Provisional data released by the National Institute of Statistics suggests that underlying inflation will be moderated to 3.3%, which is below the general index but above core inflation that excludes fresh food and energy products.

This marks a significant rise in prices compared to February when they were only up by 2.8%. The increase was driven by several factors including tax cuts on electricity ending and VAT returning to its original rate of 21%. Prices have been steadily increasing since January when they rose by just 0

By Samantha Jones

As a content writer at newsnnk.com, I weave words into captivating stories that inform and engage our readers. With a passion for storytelling and an eye for detail, I strive to deliver high-quality and engaging content that resonates with our audience. From breaking news to thought-provoking features, I am dedicated to providing informative and compelling articles that keep our readers informed and entertained. Join me on this journey as we explore the world through the power of words.

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