The year 2023 ended with a lower price increase than in recent months, but this does not mean that the increase in January 2024 must be more benevolent than other years. Only the measures established in the royal decree of special measures approved on Thursday will in some cases moderate the usual escalation of prices at the beginning of each year. Moderation will be more noticeable in food.
Basic foods are maintained. The reduction in VAT on basic foods that entered into force on January 1, 2023 will remain until June 30 at the shelves of the more than 19,000 food stores in Spain. The aim of the measure is to reduce the final price of around 7,000 products. The royal decree that has now been extended abolishes VAT on pulses, potatoes, tubers, milk, cheese, eggs, vegetables and fruit, cereals, bread and baking flour. The latter were previously taxed at the super-reduced rate of 4% and are sold without VAT for another six months. Oil and pasta decrease the VAT from 10% to 5%, and the rest of the food, including meat or fish, keep the level of taxes intact and will not have any reduction.
The electricity bill goes up. Given the drop in market prices, the Central Government has decided to gradually bring VAT up to the 21% that was applied to electricity before the energy crisis. The VAT on electricity goes from 5% to 10%. According to the energy company Selectra, “only with the increase in VAT, the bill can increase by almost two euros per month and around 25 euros per year for an average consumer”. But it will not be the only tax that makes the bill more expensive. The production value tax, which was suspended, will be 3.5%, and the excise duty on electricity will rise from 0.5% to 2.5% until June , and then to 3.8%. In addition, a new method of calculating the electricity bill for consumers attached to the regulated price (PVPC) also comes into force in January, which begins to include in the estimate a combination of market prices as before, but also the long-term ones will start to have weight.
Turn up the gas. As with electricity, gas will go from having a VAT of 5% to one of 10% during the first three months of the year, and will recover the pre-war 21% in April. However, consumers with a regulated tariff (TUR) will continue to enjoy a limit increase of 5% per month. As for butane, the Government has maintained the limit of 19.55 euros as the maximum price. In December he raised it to 15.14 and the direction of the update that he has to do in January is yet to be known.
Telephony also goes up. The big telephone companies have not had enough with the increases applied throughout the last year. The upward trend continues in 2024. Vodafone will raise at least the CPI for all its customers by 4.38%, in addition, it will raise converged rates (fixed and mobile) according to customer profiles. Movistar is another company that will raise prices from January 15. Fiber-only or mobile-only rates go up two euros, and convergent rates between two and four. Orange and MásMóvil, in the midst of a merger, have not communicated price movements.
Housing on the rise. Rental prices will continue to rise this year, even though the Housing Act sets a 3% limit on lease renewals. In terms of sales, the sector expects prices to continue to rise, in line with the 8.1% year-on-year rise in 2023, according to Idealista. However, both Fotocasa and Pisos.com highlight a cooling of the market in the coming months.
Downward type. As for interest rates, they are expected to remain high. The European Central Bank has insisted that the objective is to reduce underlying inflation to close to 2% and that, therefore, it considers it “premature” to be able to talk about the possibility of reducing them.
Discounted public transport. The Spanish Government decided at the last Council of Ministers in 2023 to maintain transport aid under the same conditions during 2024. In this way, the trips of recurring users on commuter trains and medium-distance trains will be free, and the ‘ Executive will subsidize 30% of travel tickets on public transport, as long as the autonomous communities and town councils contribute an additional 20%.
Tolls and plane. Motorway tolls will increase between 5% and 6.65% from January 1. The increase would be greater if it were not for the Government subsidies. The price of plane tickets, on the other hand, will continue to be subject to supply and demand after a rise during the past year in what is expected to be a historic year for tourism and business travel to Spain.
