Spain on Tuesday announced a 10 billion euro ($10.65 billion) stimulus package to ease inflationary pressures in its third major package of the year, bringing total aid to 45 billion euros since early 2022.
Spain, like other European countries is also struggling with the cost of living crisis. Where this crisis worsened due to the impact of the war in Ukraine on energy prices.
The package includes a bonus of 200 euros for about 4.2 million households with an annual income of up to 27,000 euros and the extension of tax cuts for energy bills to the first half of next year, Prime Minister Pedro Sanchez reported.
The package follows similar announcements last March and June, which included direct aid, tax cuts, soft loans and rent control.
The measures, coupled with an agreement negotiated with the European Union are to cap gas prices for electricity production to 6.7% in November, the lowest rate in the 27-nation EU bloc.
Slowing inflation was helped by a sharp fall in electricity prices, which fell by 22.4% from a year earlier in November. But food prices continued to weigh on Spanish household incomes, rising 15% in October and November compared to the previous year.
The government said it would reduce value added tax on basic foods such as bread, cheese, milk, fruit and vegetables and cereals to 0% from 4%. Pasta and cooking oil will have VAT reduced by half to 5%, Sanchez said.
Sanchez also announced a 12-month extension on subsidies for rail, commuter travel and a cap on fare increases. However, petrol price rebates for consumers except for the transport sector will be stopped.
He said the aid provided so far has helped Spain record strong economic growth this year.
