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The new year begins with a sharp rise in gas prices and a moderate increase in electricity

  • Making ends meet in January will be even more difficult with more expensive motorway tolls and stamps and only minimum increases in pensions

When the clocks struck at midnight on New Year's Eve they marked not only the arrival of 2018 but also changes in the prices of different products and services. This year, the traditional difficulty in making ends meet in January will be made worse by higher electricity bills and also for gas, at least for the first part of the supply.

The new year begins with a sharp rise in gas prices and a moderate increase in electricity

Both bills will continue the upward path that started in 2017. The increase in energy prices is due to the price of petroleum, although it should be more moderate than last year. According to government forecasts, a barrel of Brent will go up from an annual average of 52.8 dollars in 2017 to 54.8 this year, and that increase of two dollars is much lower than the almost ten dollars in 2016. It is known that the exporting countries want petroleum to go up to 60 dollars a barrel, and this will have a repercussion on fuel prices.

Electricity bills suffered a major increase in 2017, with the highest prices since 2009. However, this will not stop electricity starting the year on a rising trend, although it will be more moderate. To start with, the government has frozen the regulated part of the electricity bill for the fifth consecutive year. These charges account for about 60 per cent of the electricity bill (the sections relating to distribution, transport, insularity,premiums for renewable energies...).

Nevertheless, the unregulated part of the bill, which is listed on the wholesale market, will be subject to increase. In 2017 the average price of electricity shot up by 32 per cent to 52.5 euros/Mwh, which added about 80 euros a year to consumers' bills. In 2018, the futures markets are predicting an increase of 10 per cent, which means bills will go up by an average of2.5 per cent.

Gas

Making ends meet in January will be harder for those with gas bills. With the arrival of the new year the Last Resort Tariff (TUR) went up by 6.2 per cent for the first quarter. Specifically, for TUR1 -people who use gas for hot water and cooking - there will be an increase of 4.9 per cent, while for TUR2 customers - who also use gas for heating - there will be a rise of 6.6 per cent. The increase is due to a rise of 18 per cent in costs of raw materials. The government has tried to compensate for this by freezing the charges for the regulated part of the bill for the fourth year running.

Butane

The price of a 12.5 kilo bottle of butane gas, which is used in eight million homes in Spain, started the year at 14.45 euros after a 2.1 per cent increase in November. The price will be reviewed in mid-January and everything points to a further increase due to a rise in the cost of the raw material. The cost of a gas bottle has gone up 28.5 per cent since its minimum of 11.25 euros in July 2016. In fact, in the past year alone the cost has risen by about 17 per cent. The first four reviews of 2017 increased the cost by the maximum legal rate of five per cent, although in August there was a reduction of the same proportion. However, as it went up again in November this made very little difference.

Motorway tolls

After going down for the past two years, tolls on the State-run motorways are increasing again. Drivers who use these roads will see an increased cost of 1.91 per cent, and this will counteract the average reductions of 0.6 and 0.4 per cent which were applied in 2016 and 2017.

It will have to be seen whether this increase has any effect on the volume of traffic using the toll motorways. So far, in the first nine months (the latest figures available) of last year, 4.7 per cent more vehicles used these motorways, which is an average of 19,801 a day. Curiously, the nine motorways which have needed a bailout from the government saw the number of users rise by 9.4 per cent between January and September last year.

Postal charges

Consumers will also find postal services more expensive now. A stamp for normal letters and postcards weighing less than 20 grammes went up by 10 per cent in the New Year, from 50 cents to 55. This is the third-largest increase in the past decade.

Pensions

Pensions are going up by 0.25 per cent in 2018, the fifth consecutive year in which the government has decided to apply the minimum revaluation stipulated by law. It means that the average retirement pension will go up by 2.67 euros a month from January, to fourteen payments of 1,073.68 euros. Meanwhile the average widow's pension will only go up by 1.60 euros a month, to 650.81 euros. In practice, the revaluation of 0.25 per cent will mean another loss of purchasing power for these pensioners, because inflation is expected to be higher (1.6 per cent). Spanish pensioners already lost nearly one per cent of their purchasing power in 2017.

Minimum salary

One of the few pieces of positive news in early 2018 is an increase of around four per cent in the minimum wage to 14 payments of 736 euros. The agreement signed by the government, unions and employers was to increase the figure to 850 euros by 2020 if GDP rises by 2.5 per cent and 450,000 jobs are created.

Euríbor

The Euribor, which is the principal reference index for mortgages, ended 2017 at a minimum low of -0.19 per cent. In 2018 negative values are expected to stabilise.