The decision is made. The Government will be forced to extend some of the measures of the last anti-crisis plan that expire on June 30, given the pressure that the rise in prices continues to exert on the pocket of the Spaniards. The economic vice president, Nadia Calviño, has already confirmed that one of them will be the VAT reduction on basic foodstuffs which, according to data from the Tax Agency up to April, has already cost the Executive to stop entering some 254 million euros.
The decision has been made in the face of the resistance that food prices are showing to lowering. Something that, in turn, has considerably slowed down the impact of the measure. Pending the final data for June, food inflation stood at 12% in May. The figure has dropped from the 12.9% registered in April, but it is still very high, notably affecting staples such as milk, which has risen by more than 23% compared to a year ago.
«We are awaiting the price data in June, which we will not know until the end of the month, and on Thursday we will have the first preview. But it is seen that the price of food is still high. That is why we believe that the VAT reduction must be maintained, but always linked to how prices evolve in the coming months, “Calviño said in an interview on RNE.
The measure is not expected to be extended to other products where until now it was not applied, such as meat or fish, which have also become much more expensive in the last year. It is true that the price of fish fell by 2.7% in May, according to the latest data from the INE, but it is still 3.6% more expensive than a year ago. Regarding meat, it continues to accumulate increases in all its varieties, the most affected being pork, with an increase of more than 16% compared to May 2022.
Against this background, the Council of Ministers will approve the extension of this measure on Tuesday, which the Government initially also proposed to suppress if the underlying infaltion fell below 5.5%. As of today, this reference, which excludes energy and fresh food prices from its calculation, remains above 6%, placing its difference with the general CPI at almost three points.
Transport
More effective have been other measures that are also likely to be extended, such as those adopted to encourage public transport. And there are more doubts about the fuel discount for professional transporters, at a time when energy prices have fallen significantly. Specifically, the price of oil was well above $120 when the aid of 20 cents per liter was launched. At the end of the year, when individuals were taken out of the bonus, it was around $85. And now it is trading at 78. 38% less than at the outbreak of the war.
Added to this is the increasing pressure from different national and international organizations to gradually withdraw the spending measures and start a path of consolidation to help meet the deficit and debt targets agreed with Brussels.
The Bank of Spain has been the most insistent on this point, with the governor, Pablo Hernández de Cos, recalling in practically all his public interventions the need to adjust and measure these aid measures to the millimeter, so that they remain only in the environment of the most vulnerable groups.
At the moment, Calviño has only advanced that with the prospect that inflation will continue to decline in the coming months, he is confident that the anti-crisis measures adopted by the Executive will cease to be necessary “little by little.”
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