At a time when more people around the world than ever are experiencing financial difficulties, as a result of the impact that the current Coronavirus pandemic has had on their livelihoods, unfortunately the cost of living is continuing to increase. This is certainly true in Spain, where the cost of everyday essentials such as food shopping, electricity and even internet access has only increased throughout the early stages of 2021. Here is a list of the everyday essentials that most people currently living in Spain will need to purchase, and a breakdown of whether the costs involved in these living expenses are set to increase or decrease throughout the year:
The Costs That Will Increase
- Internet Prices
Driven by the huge numbers of people staying at home and both working and educating their children remotely, the demand for internet connection in the home is higher than ever, and internet and telecoms companies in Spain are taking advantage of this. Many companies are putting up their prices: vodafone increased their prices in November 2020, Orange immediately followed suit. And as of January 18th, Movistar’s Fusion pack of TV, mobile and fiberoptic internet will increase by €2 to €3 a month.
- The Cost of Fuel
The cost of fuel in Spain also increased during 2020, as a result of the global drop in fuel demand. In Janaury the average price per litre for petrol was €1.18, whilst the average price per litre for diesel was €1.06. It is thought that these prices will continue to increase throughout 2021, and the trend for monthly fuel increases is set to continue. It is, however, important to put this into context and remember that petrol is still cheaper in Spain than elsewhere in the Eurozone, and cheaper compared to the prices in the post-Brexit UK as well.
- Gas Bills
The price of natural gas in Spain is regulated by the Government TUR index. For the first time since 2018, this has now been increased. The average increase is currently 5.97 percent, depending on which user band you fall into. If you’re in the TUR 1 bracket for example (these are mainly customers who use gas for their hot water supply) you can expend your tariff to increase by 4.6 % whilst if you use your gas for heating and fall into the TUR 2 bracket, you can expect your tariff to increase by 6.3%.
- Tax Rates for Higher Earners
If you’re fortunate enough to be a higher rate earner, then you’re going to see your tax increase from 45 to 47 percent this year if you earn over 300k a year, and your tax will increase from 23 to 26 percent if you earn over 200k each year. This change was announced in the Spanish governments official budget and will affect 36,194 people, or a total of 0.17 percent of taxpayers in the country.
- An Increase in Wealth Tax
Sticking to the subject of taxes, the same new Budget law has also introduced an increase in the wealth tax on fortunes higher than €10 million. This figure will change from the current rate of 2.5 percent to 3.5 percent. If this tax is relevant to you, it still may not apply however, as each regions will have the final say on whether to impose this tax or not; in Madrid, for example, the wealth tax is not applied.
- Fizzy Drink Taxes
In response to Spain’s ongoing obesity crisis (an issue that is Euro-wide, in reality) the Spanish government will introduce a tax increase on sugary drinks from 10 to 21 percent in Spain starting in 2021. Struggling bar and restaurant owners will be exempt from this tax, but as well as discouraging people from overindulging in sugary drinks, the tax hike will bring an additional €400 million into Spain’s public coffers.
The Costs That Will Decrease
- Public Transport Prices
Public transport usage across Spain has decreased considerably as a result of the Coronavirus pandemic. As a result, public transport companies are reluctant to increase their prices, for fear of further dissuading users from returning to them when covid restrictions are relaxed.
Madrid metro prices will remain the same as they have been since 2013, Barcelona will freeze its rates after increasing them by 9 percent in 2020 and in Valencia ticket prices across its transport network will also not be changed. If you regularly travel by sea, it may interest you to know that Spain will lower its rates in 2021, reducing route rates by 11 percent on the mainland (from €51.08 to €45.44) and 8.5 percent, in the Canary Islands from €43.73 to €40.Finally, whilst we don’t know what will happen to the hard-hit air transport sector, we do expect prices to drop in order to encourage passengers to return when air corridors are reopened.
- Property Prices
Finally, property prices are set to fall throughout 2021, making right now the perfect time to take the plunge and invest in your dream Spanish property. The general consensus among the world's top credit rating agencies is that 2021 is the year in which property prices will drop the most in Spain, before recovering quickly and potentially even exceeding the rates that they were before the coronavirus crisis began.
Are you thinking of moving to Spain? Sick of the dreary British weather and ready for some year-round Spanish sun? If you’re looking for estate agents in Southern Spain then why not get in touch? Our locally based property experts are a font of local knowledge, and are perfectly placed to help you find the home of your dreams.