Increase in energy prices fuels fears of a difficult winter in Spain

by Lorraine Williamson
winter heating

MADRID – In many areas of Spain it can be very cold in winter despite the sun shining a lot. Most houses are not equipped for cold and do not have central heating. As such, people use gas stoves, air conditioners, or electric radiators. 

Now that energy prices, like elsewhere in Europe, are constantly rising, Spain fears a difficult winter ahead.  Prices have risen in Spain by 44% within one year. And winter is literally just around the corner. 

The Spanish government’s attempt to put pressure on Brussels for a joint solution to rising prices has failed. Therefore, Spain must figure out for itself how to avert the crisis affecting households and businesses in their finances. 

The National Statistical Institute has again released figures that show that the price increases seem to be unstoppable; electricity increased by 10.9% in September compared to July, and 44% compared to last year. 

Inflation at highest point in 13 years 

The cost of living has risen in Spain for seven consecutive months. And inflation, rising to the level of 4%, is at its highest point in 13 years. Spain is not only dealing with the stress of electricity meters. As a result of international markets’ increased oil prices, gasoline increased by 22.1% in 12 months and diesel by 23%. 

Increased consumer prices 

The consumer price index, which follows the evolution of the prices for 221 products or services, shows that, in addition to the increased prices for electricity and fuel, the prices of travel and holidays have also increased, albeit to a lesser extent. The prices of hotels rose by 10.8%, those of package holidays by 4.3% compared to a year ago. 

Cogesa Expats

In other products closely related to the season of the year, such as clothing, the change was particularly noticeable compared to August, with clothing and footwear up 5.3%. The list also reflects new realities that may be related to the pandemic: private health insurance increased by 5.2% compared to 2020. Among the more expensive products compared to the previous year are olive oil (+25.6%), according to the sector rose sharply (-22.5%). 

Public unrest in politics 

Price increases are possibly one of the biggest causes of public unrest in politics. While those with measures such as raising the minimum wage, or revaluing pensions and salaries for civil servants try to mitigate their impact, high inflation is seen as a kind of tax that eats up savings. 

This year, the price for electricity rose every month, except in February, when strong winds and the drop in demand due to the rise in temperatures after storm Filomena passed, caused a drop in tariffs. However, in recent months, double-digit increases have become common: according to the INE at 36.9% in April, 36.3% in May, 37.1% in June, 26.9% in July, and 34.9% in August. 

In the short term, the situation is urgent. With natural gas reserves below their historical average and winter approaching, time is running out. Spain tried to avoid this scenario with concerted action by the Twenty-seven Euro countries, but Brussels believes that the States themselves should be “better equipped” to take measures to end price increases. 

Minister Teresa Ribera, the third vice president, expressed the government’s disappointment with this response: She accuses the European Commission of “incongruity” for presenting proposals that “do not address the exceptional circumstances of the current situation”. 

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