The Government decided to cancel the increase planned for electricity and gas rates in July and will not apply adjustments to the fuel tax. This measure seeks to avoid additional pressures on the cost of living.
The aim is to avoid increasing inflationary pressure this month and to provide relief to households that have suffered a significant loss of purchasing power.
The decision to cancel the rate increases is due to the increased energy consumption due to the cold, especially in gas and electricity. According to official sources, this measure will initially apply only to July rates with the intention of supporting the recovery of the population’s purchasing power.
The measure will affect household consumption for the next month and, depending on the billing date, Most users will pay the new rates in August. Earlier this month, the government modified the maximum subsidized consumption limits and bonuses on wholesale prices of electricity and natural gas for low (N2) and medium (N3) income users, in accordance with the Transition Period established by Decree No. 465/24.
This measure begins the transition from a generalized subsidy regime to a more focused one, where users can know the cost per kW of electrical energy and per m³ of natural gas. State assistance will also be determined according to the users’ ability to pay, with a consumption limit that will be recognized through a bonus.
For an average consumption of 250 kW, the increases in the different categories will be:
N1 (high income): from $24,710 to $30,355 (increase of 23%). In July, maintaining the same consumption, the bill will be $30,355, affecting 1.5 million households.
N2 (low income): from $6,295 to $12,545 (99% increase), covering 1.9 million users.
N3 (middle income): from $6,585 to $16,850 (increase of 156%), encompassing 1 million customers.
As for gas, consumption in July will not increase, so users will pay the same as in June, provided consumption remains the same.
A gas tariff increase of 9.2% for segment N1, 33% for N2 and 10% for N3 was established for this month.
The new decree establishes that inflation updates for the fourth quarter of 2023 and the first quarter of 2024 will be carried out starting on July 1. Despite the postponement, the Ministry of the Economy is planning a new monthly indexation mechanism starting in August.
The government is seeking to avoid jeopardizing the slowdown in inflation, and will therefore continue to postpone increases in sensitive areas for consumers, although this implies greater future pressure on retail prices.
In the next few hours, the Executive Branch will publish a decree that will defer the increase in the Liquid Fuel Tax scheduled for next Monday, as was done in May and June. From July 1, the tax increase will be 4% in the final prices of gasoline and diesel, much less than the 18% expected, according to official sources.
