Added to the post-Christmas economic hardship this year are rising mortgages, energy costs and a shopping cart that won’t give up
Unwrapping all the gifts from kings, January is now in full swing, especially for family budgets that have been shaken. It’s a different tradition after Christmas. But on this occasion, the costs to be incurred are even more complex than the last due to the general increase in prices in the shopping cart, due to tensions in receipts and invoices and especially due to mortgages.
Last April, when the Euribor was positive for the first time since 2016, few mortgage lenders could have imagined that they would see an increase in their repayment terms under the conditions they control today. The housing loan revisions assume monthly increases of more than 200 euros.
Because the interbank rate has not only consolidated positively (a year ago it stood at -0.5%), but also because the rise was unstoppable. The month of December closed at 3%. And what’s worse, organizations like Asufin expect the index to reach the 4% level already in June, which means an increase for every $100,000 mortgage, with a difference of 1%, of just over $2,000.
“This overview will show an increase in the annual additional cost in just one year, if we take into account what happened in 2022, of 2,769 euros,” they point out in the financial association. Allocating up to 200 euros more per month to the mortgage means stopping spending on other options, getting worse at the end of the month or, at best, foregoing realized savings.
Electricity and gas have been the major handicaps faced by families and businesses in 2022. And despite the ceasefire that seems to have been concluded in recent days, the average price of electricity in 2022 has almost doubled compared to 2021 and is the highest price in history, at 209 euros/MWh. In fact, the most expensive year since the beginning of the historical series of available electricity cost data has just ended.
Only in August was 307.8 Euro/MWh reached and on March 8 the price was a historic record and approached 545 Euro/MWh. Despite the Iberian cap, the reduction of VAT to 5% and the reduction of charges on the bill, electricity remains expensive this year. Especially if the cold gets worse these weeks of January and demand skyrockets. Electricity futures expect an average price of 150 euros/MWh this year, far from the average of 45 euros/MWh in the Spanish market.
In the case of gas, the transfer of customers at the regulated rate (TUR), limited by the Executive, remains constant. This modality is up 8.6% since January, reflecting raw material costs. Although without the TUR, the escalation can be up to four times as much.
The basic shopping basket is the last CPI item that has not yet reflected the reduction in energy costs. Through December, they were up more than 15%. The year started with the reduction of VAT on various products. While waiting for families to verify this measure, a household with an income of 1,000 euros spends almost 20% on food; those with an income of 5,000 euros spend no more than 12% on the shopping basket.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
