Yes Pedro Sánchez It happens this Thursday Head of Government it seems, basic food products They will keep their VAT discounted until June 2024. This was announced by the socialist candidate in his speech, where he opened the investment debate, and this is how he responded to a question. The increase in food group prices is still close to 10% reaching 73.5% in case of olive oil. The approximate cost of extending this tax break on certain foods until the first half of 2024 could be closer to: 900 million euros Based on budget impact through September 2023 (1.294 million).
Sánchez’s announcement also responds to one of the most consensual demands in the food chain. In fact, the only official view expressed so far is Organization of consumers and users (OCU), is a criticism that it is inadequate. “We celebrate the announcement but don’t understand why meat and fish are excluded: a recent OCU survey of 1,500 people reveals: raised inflation in food mainly affects these two basic products“, defended the association in his statement and reminded that food inflation increased by 9.5 percent in the last 12 months.
This sector, which had increased its price above 10% for 18 consecutive months until this October, has been easing its intensity since then, although it reached its peak in February this year with a price increase of 16.6%. Data just published by National Institute of Statistics (INE) shows that food in October was still 9.5% more expensive than a year ago. And in the same month of 2022, it had already become 15.4% more expensive than the previous year.
Given this scenario, it is not surprising that the Government is considering keeping the measure in place. This strategy, launched at the beginning of the year, includes key products such as bread, eggs, milk, fruit And vegetable, potatoes, cereals waves legumes sold with VAT 0% (previously it was 4%) oil And pasta Go from 10% to 5%.
So the idea was to keep this plan active until the middle of the year or into 2015. annual core inflation rate (the rate that measures the increase in the cost of living without taking into account energy and unprocessed food prices) will be below 5.5%. By June the rise in food prices was still out of control and had not yet fallen below the headline inflation rate, so the Government extended the measure for another six months.
“That’s the line we should generally follow – measures that adapt as automatically as possible to the response of the economy.” First Deputy Chairman of the Government and Minister of Economic Affairs, Nadia Calvino. In his words, the VAT reduction will continue unless “more affordable” price levels are reached.
It follows that what prevails in this case is only food inflationFor the first time since this month, the annual core inflation rate fell below the threshold set nearly a year ago (+5.2%).
Widespread support
Although none of the economic sectors directly affected by this measure have yet commented on the issue, this is a measure that has had support from the very beginning. support from the country’s major business associations. In fact, the only criticism it receives is from consumers and that it is inadequate.
FacuaFor example, it has been tracking the evolution of these prices in supermarkets for months and has concluded that prices for around half of the products continue to rise. However National Markets and Competition Commission (CNMC) recently produced a report ensuring supermarkets are implementing the measure correctly.