There is no magic wand that will get us out of this difficult situation
The government’s package of measures to combat inflation has achieved two positive outcomes: it directs €70 million primarily toward vulnerable segments of the population, and, second, it dispels any illusions that there is a government “magic wand” that will get us out of this difficult situation.
From here on out, it’s time to take another look at our revenues and expenditures. First of all, at a time when the average price of diesel has approached or even exceeded €2 per liter at gas stations, the government has announced a new package of measures to address the cost of living. A package that, however, does not include any new intervention regarding fuel prices, at a time when transportation costs are already placing significant strain on households and businesses.
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And this does not necessarily mean that the government is out of touch with reality. It means that the scope for further across-the-board tax cuts has been significantly limited following the measures taken during the previous wave of inflation.
The 8.33-cent-per-liter reduction in the excise tax on motor fuels has already been utilized as a support measure, while excise taxes on consumption are now subject to significant fiscal and European constraints. The question, therefore, is not only what the government would like to do, but also how much leeway it actually has to do so.
What the government could do—and did do—was act on heating oil. Its average price has reached about €1.56 per liter, up from about €1.00 during the same period last year. That’s an increase of about 56%.
Let’s take a household that needs 1,000 liters for the entire winter season. Last year, they would have paid about €1,005. At today’s price, they’ll need about €1,564. That’s about €559 more for exactly the same amount of heating oil.
The 5-cent-per-liter reduction in the excise tax lowers the cost by about €60 for 1,000 liters, once the impact of VAT is factored in. Households, therefore, will not pay an additional €559 but approximately €500 more than last year.
€60 is real help. But it’s not €500. The Ministry of Finance now estimates that inflation for 2026 will hover around 4.4%. If this forecast is confirmed, it means that within just one more year, the cost of living will rise significantly.
And inflation isn’t just a number on a chart. It’s the difference citizens see on their grocery bills, at the gas station, on their energy bills, and for services.
When prices rise faster than disposable income, the difference has to be made up somewhere—either through higher income or by spending less. Everyone now has to figure out what they can do.
