Gasoline prices in Spain rise for fifth week, nearing annual high

Fuel prices in Spain have climbed for the fifth consecutive week, with the average gasoline price reaching 1.69 euros per liter and diesel hitting 1.79 euros per liter between July 27 and August 3. These figures are approaching the year's maximums, which were recorded earlier in the year following the outbreak of conflict involving Iran.

The increase occurs despite a recent decrease in Brent crude oil prices, which had been influenced by more positive expectations for a ceasefire in the ongoing conflict. A primary driver for the domestic price hike is the phased reduction of direct subsidies on hydrocarbon taxes. Initially 15 cents in July, the subsidy dropped to 10 cents in August and is set to decrease further to five cents in September. Additionally, the Value Added Tax (VAT) on gasoline and diesel has returned to 21%, after being lowered to 10% in March.

These rising fuel costs come at a time when many Spaniards are embarking on their summer holidays. The preliminary inflation data for July showed a 3.5% increase, largely due to higher fuel and electricity prices, according to the National Statistics Institute. This figure is considerably higher than the 2% target set by the European Central Bank.

Despite the recent increases, average fuel prices in Spain remain lower than the European Union average. In the EU, gasoline averaged 1.95 euros per liter and diesel exceeded 2 euros per liter during the same period. Denmark and the Netherlands reported the highest fuel prices within the EU, while Malta continues to have the lowest, with prices frozen since June 2020.