article_detail

There’s finally some good news for motorists as the government has just announced that drivers in Spain will get a bigger discount on diesel from September after prices rose sharply during July.

 

The government had planned to reduce the fuel discount to 5 cents per litre in September, but that will now increase to 20 cents after diesel prices jumped 15.7% year-on-year in July.

 

The increase triggered a safeguard measure included in the government's anti-crisis plan, which means extra support is automatically provided when fuel prices rise above a set level.

 

The discount had already been reduced from 15 cents to 10 cents per litre in August, just as millions of people were preparing to travel for their summer holidays.

 

Petrol prices haven't risen by as much. They were 7.3% higher than a year earlier in July, meaning petrol will continue with the original plan and receive a 5-cent-per-litre discount from September.

 

The government said its measures are helping to limit the impact of the higher energy prices caused by the conflict in the Middle East. According to the Ministry of Economy, the measures have so far offset more than 60% of the increase caused by the external shock.

 

However, the higher fuel prices are feeding into Spain's overall inflation rate.

 

Inflation reached 3.6% in July, up from 3.2% in June and its highest level since May 2024. It was also the fifth consecutive month in which inflation increased.

 

Energy prices were a major factor, with liquid fuels up 31.5% so far this year. Electricity was also 8.4% more expensive than a year earlier, while natural gas prices rose by 4.1%.

 

Core inflation, which excludes energy and unprocessed food, also increased slightly to 3%.

 

Food prices have been more stable overall, with food inflation falling to 1.6%, its lowest level since 2021. Some products have still become significantly more expensive, however, including citrus fruit, which rose by 15.5%, eggs by 13.4% and fresh fish by 7.7%.

 

The OECD and International Monetary Fund have warned Spain against using broad fuel subsidies to tackle the impact of the conflict, arguing that financial support should instead be targeted at households most affected by rising costs.