Returning to school and normal life after the holidays hugely expensive in Spain

by Lorraine Williamson
returning to school

Returning to school, and the usual routine after the holidays of the first ‘practically normal’ summer after the pandemic will be extremely difficult for many Spaniards. Inflation has not been as high in 38 years, with wages rising almost four times as slowly as prices. As a result, Spaniards face a difficult September, a month that has traditionally been difficult for domestic finances.  

It was a good summer for tourism in Spain. The hotel and accommodation sector did well again after the pandemic. In July, hotels were already back to 2019 occupancy levels, but this year sales are even higher due to inflation. Furthermore, the increase in holiday spending makes September even more complicated for Spaniards. Families with school-age children are particularly struggling.  

Returning to school  

‘The children are going back to school and that means extra costs,’ explains Antonio Gallardo, expert at Banqmi, iAhorro’s financial comparator. It is estimated that in September this year, each family will spend €405.70 per pupil. That is 4.7% more than last year and the largest increase in spending in the last five years. School books and uniforms are significantly more expensive than in 2021.  


Food and drink prices have also risen sharply in recent months and, according to the latest data from the National Institute of Statistics (INE), are already 14.5% higher than a year ago. Basic products have risen particularly sharply, such as;

  • flour (38%)
  • pasta (32%)
  • butter (26%)
  • milk (23%)
  • eggs (22.5%)
  • baby food (17.5%)  

‘After the holidays, many Spaniards do more shopping, but the main problem is that they often postpone payment by using a credit card’, explains Gallardo. Consequently, he predicts consumption will fall significantly from September onwards. ‘Of course there will be the unavoidable expenses, such as for going back to school. But other necessary expenses will drop significantly and even the basic shopping package will be cut back significantly,’ he adds.  

More expensive electricity, cheaper petrol  

The abrupt increase in the price of gas on European markets that occurred in the month of August will also push up electricity bills in September. August saw the highest electricity prices in history. Electricity on the Spanish wholesale market was 66% more expensive on Thursday than at the start of the summer.  

The good news, however, is that the fall in oil prices is being passed on to the pump. According to data from the portal, a litre of 95 petrol cost an average of €1.797 in Spain on Wednesday. This is without taking into account the 20 cents discount from the government. That is 16% cheaper than at the beginning of the summer. The price of diesel fell slightly less, currently costing €1.930 per litre, which was €2.10 (8% less) on 21 June.  

Cogesa Expats

Also read: Petrol and diesel prices continue to fall

More pressure on mortgages  

The latest movements of the Euribor – the indicator to which most variable rate mortgages and a large part of consumer loans are linked – will also put pressure on personal finances. The 12-month Euribor closed at 1.25% in August, the highest in ten years.  

This will affect mortgages that will be reviewed from September. In most cases, the mortgage payment is updated once a year and the Euribor published in the month before the revision is used. For an average €150,000 mortgage with a 30-year term and an interest rate differential of 0.99% compared to Euribor, an interest rate of 1.25% could mean an increase in repayments of €120 per month.  

Also read: The end of cheap mortgages in Spain

Government tries to cushion the impact  

High inflation has been eating into Spaniards’ pockets for months and has become a priority for central and regional governments. Given that the energy crisis could last for months, in July the central government extended its anti-inflation plan until the end of the year. It also extended other measures such as the free Renfe subscriptions, the 20-cent subsidy on fuel, the reduction of most taxes on electricity bills, the extension of the subsistence minimum and the introduction of two new taxes on large energy and financial companies. 

Do’s and don’ts 

Returning from holidays can be a strain on the wallet, but some tips can help to make the situation a little more bearable. Increasing income is not obvious, so experts recommend strategies for saving, spending control and planning.  

  • ‘Budgeting for expenses is more important now than ever. We need to look at all spending, including mortgage or rental charges, which in many cases can be negotiated and improved,’ explains Antonio Gallardo of iAhorro. In a context where the Euribor is making mortgages and most loans in general more expensive, it may be a good time to sit down and negotiate. 
  • Other expenses that are also worth investigating are the cost of television and internet packages, insurance premiums or the electricity company. A good time to check offers from other providers. And to reconsider gym memberships or subscriptions to certain services.  
  • Gallardo advises against using finance products such as credit cards to save the situation, as the interest will eventually make the problem worse. If there is no other alternative, the specialist recommends keeping the expenses that are paid or financed in instalments under control and trying to pay as high an instalment as possible to pay off the debt as soon as possible. 

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