There are two bits of bad news on the financial front in 2011: we have less spending power and prices are rising and are set to keep rising throughout the year.
The increases in prices and tariffs have coincided this year with the freezing or reduction of income in many homes. The tax benefits for home owners in the middle income bracket have been scrapped; mothers with babies born after January 1 , 2011 are 2,500 euros poorer as the Baby Cheque is abolished; and the special payments ( similar to Income Support) for long term unemployed have been «restructured.»
Public sector workers in Spain have seen their salaries cut by 5% from last June as part of the Government´s austerity measures and all state pensions are frozen.
Electricity, gas, petrol, mortgages, stamps, taxes payable to the public administrations have all risen this month and we are in line for more rises during the year.
As reported in last month’s NEXOnr electricity prices rose by nearly 10% from January 1, 2011. Consumer groups had called on the government to take steps to reduce the increase but after the Minister for Industry described the rise as “the same as the cost of cup of coffee for every member of the family” Government intervention seemed unlikely. The 9.8% took effect on the January bills for 17 million homes and small business. There are expected to be further rises in April, July and October this year.
Both Gas Natural and Butane bottled gas have risen in price. Natural Gas has gone up by 3.9%, without a heating contract, and by 4.14% with heating. Butane gas has risen by 3.13% to 13.19 euros a bottle.
The Euribor, the reference for the mortgage interest rate in Spain, has risen slightly by 0.28 points and more slight increases are expected over the year with experts predicting the Euribor could stand at around 2% by the end of 2011. Readers with mortgage reviews in January are likely to note an increase in repayments (on a mortgage of 150,000 over 25 years with a rise of eight cents interest payments would increase by 17 euros a month).
Motorists are being hit as the 100 dollar a barrel of Brent crude translates to into price hikes at the pumps. Petrol now stands at an historic high of 1.285€ a litre and the price of diesel has risen steeply over the last two months to 1.217€ a litre.
More bad news for motorists is the average increase in motorway charges by 1.44% with some charges rising by 3.25 or 3.43%.
Everyone is likely to be affected by the 1.1% rise in taxes paid to the public administrations for documentation such as “padrons,” building licences etc.
Posting a letter to an address in Spain cost 2.94% from January 1 and the ordinary post to Europe (up to 20g) costs 1.56% more. Post to all other international destinations costs between 2.56% and 2.64% more from the first of last month.
Regional newspapers report that local vegetable prices “had hit the roof” during last year with onions costing 11.4% more; potatoes 10.9%; tomatoes 7.36% and lettuces rising in price by 6.47%.
Salmon also cost 8.66% more by the end of the year and some tinned goods increased in price such as anchovies (4%) and green peppers (6.4%).
