The latest economic data has brought at least some good news for the Canary Islands in the shape of lower inflation than the rest of Spain.
According to official data released on 14 March, price rises during February across various sectors totalled 0.5% (slightly higher than elsewhere) and saw the annual inflation rate reach 2.2% in the islands, almost a full percentage point below the 3% average recorded for Spain overall. The rate places the Canaries well below Spain’s other island region, the Balearic Islands, which heads the national inflation table at 3.6%.
While a positive spin has been put on the results by the government, analyists have been quick to point out that the current annual figure for the rest of Spain has been driven largely by the controversial reinstatement of the full VAT rate (21%) applicable to household electricity bills, which have benefited from reduced VAT (10%) since the summer to offset rising energy costs. The Canaries do not have VAT and instead apply a much lower regional sales tax, known as IGIC, which is levied at a much lower general rate of 7% compared to mainland VAT.
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