Even tax cuts can’t stop the rise in the shopping cart. And the 0.2% increase in food prices in the province of Alicante last January, demonstrating the ineffectiveness of the VAT reduction approved by the Government for food products. While supermarkets attribute this increase to the increase in costs at the source, consumer associations think that some links in the distribution chain are making a profit. This price increase, in any case, This contrasts with the notable fall in energy prices as well as clothing and footwear prices.played a decisive role in reducing inflation by only 0.1%.
There were many hopes for VAT reductions on staple food products such as eggs, dairy products or fruit, which have been exempt from this tax since 1 January. Oils and pasta also fell from 10% to 5% on the same date. However, data released by the National Institute of Statistics (INE) showed that shopping cart prices continued to rise during that month. achieved an annual growth of 16.1% in the province.
And what happened to cause food to become more expensive? Pedro Reig, Director of the Association of Supermarkets of the Community of Valencia (Asucova), It highlights that almost all products affected by the VAT reduction actually lowered their prices.. He explains that fruit is 4.2%, flour 2.3%, milk and eggs 1.5%, potatoes 1%, cheese 0.7% and bread 0.2%. He draws attention to the need to investigate the reason why these decreases are less than expected. rising prices at the source. The increase has been practically continuous over the past year, with a trend that continued earlier this year”.
He adds that this increase in costs at the source also affects other foods that are not affected by the VAT reduction. Consumer Price Index (CPI). “We have to take into account that only 1,000 of the nearly 8,000 references found in supermarkets have tax breaks,” he emphasizes.
Cecilio Nieto, President of Alicante Consumers Union, expressed his disappointment with what happened and stated that he did not share the same vision. “Obviously, food prices would have risen even more if this VAT reduction had not been mediated. But beyond the cost increases at the source, it gives the feeling that there is a manipulation in the markets. Someone in the distribution chain must be making more profit than they shouldand Management should take stronger action than this patch because there are families going through really bad times”.
January CPI data shows an increase of 2.8 percent in non-alcoholic beverages and 3.2 percent in alcoholic beverages, excluding food. By contrast, electricity, gas and other fuels fell sharply by 13.1%. Clothing prices increased by 15.3 percent, and shoe prices increased by 5.6 percent. The 13.5% decrease in tourist packages is also noteworthy.. All this led to a slight decrease in inflation compared to the previous month, but above 6% compared to a year ago.
The trend has been similar across the country., with inflation rising 0.3% month-on-month in food and falling 0.2% overall. In the case of the Valencian Community, shopping cart prices increased at the same rate as in Spain as a whole, while the CPI fell by 0.3%.