Petrol prices have risen dramatically, | CARL RECINE

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Spain announced 16 billion euros ($17.5 billion) in direct aid and soft loans today to help companies and households weather sky-high energy prices that are pushing up inflation and stoking social discontent.

The government will approve on Tuesday the package to mitigate the fallout of Russia's invasion of Ukraine, Prime Minister Pedro Sanchez said at a corporate event.

"The war response shock plan will protect industries and citizens," he said. The three-month plan will come into force on April 1.

Truck drivers have been on strike for two weeks over fuel prices, causing sporadic goods shortages around the country.

Around 6 billion euros will come as direct aid and tax cuts mostly extended from a previous package related to the COVID-19 pandemic, while the remaining 10 billion euros are subsidized loans. There will also be limits on house rent increases and caps on energy prices.

It will initially be approved by decree as the government's fragile parliamentary majority makes approval in Congress difficult.

Highly exposed to external shocks, Spain was among the worst hit European countries by the pandemic and responded with a mammoth 140 billion euro economic rescue plan. Now faced with protest at home over energy prices, which soared 60% in a year to February and pushed inflation close to 8%, Madrid is taking new steps to protect its economy.