Spanish inflation has surged to a near 37-year high due to soaring energy prices following Russia’s invasion of Ukraine, official data showed Wednesday, adding pressure on the government.
The rate jumped to 9.8 percent in March from 7.6 percent in February, its highest level since May 1985, according to a preliminary estimate from national statistics institute INE.
“It is a bad figure which affects our economy, especially more vulnerable groups … due to runaway energy prices,” Socialist Prime Minister Pedro Sanchez told parliament.
Like the rest of Europe, Spain has been struggling since last year with soaring energy prices, with households and businesses struggling to pay electricity bills.
Since Russia invaded Ukraine on February 24, oil prices have spiked, and Spain’s transport and farm sectors have staged noisy protests and strikes to demand help with crippling gasoline prices.
The March increase was due to the surge in electricity and fuel prices, but also by the rise in the cost of food items due to the war, the statistics office said.
Sanchez’s government approved Tuesday plans to offer 16 billion euros ($17.5 billion) in direct aid and loans for companies and households hit by the impact of Russia’s invasion of Ukraine.
The measures, which will remain in place until June 30, include a discount of 20 cents per litre of fuel, with the government paying 15 cents and fuel providers the rest.
It also includes a 362-million-euro aid package for the agriculture and farming sector, 68 million euros for the fishing and aquaculture industries and a two percent cap on rental increases.
For households, over the next three months, rent increases will be limited to a maximum of two percent.
Spain, together with Portugal, will send a proposal in the coming days to the European Union to cap gas prices, on the back of a special authorisation announced late last week by Brussels authorising the two countries to intervene in power markets.
The government hopes that the combination of economic aid and finding a way to decouple gas prices from electricity costs will help defuse internal tensions.
“We are convinced that the national response plan and especially the agreement reached in Brussels to set a gas reference price… will allow us in the near to bend the curve (of inflation) and stabilise the evolution of the cost of living,” Sanchez said.
