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Date Published: 15/02/2023

ARCHIVED - Food prices continue to climb in Spain despite VAT reduction

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The cost of butter and milk in Spain has increased by 30% in the last year

<span style='color:#780948'>ARCHIVED</span> - Food prices continue to climb in Spain despite VAT reduction

Despite the fact that the Spanish government introduced a VAT reduction on certain staple grocery items to slow the crippling rise in food costs, prices still increased by 15.4% in January, while general inflation rose by 5.9%. This was the first rise after almost six months of decline following a devastatingly high peak in July when the figure reached 10.8%.

The experts blame the elimination of the 20 cent per litre fuel discount for the rise in the Consumer Price Index (CPI) this year. Of all the consumer products on the market, the cost of petrol and diesel increased the most last month, rising by 12.7% and 10.2%, respectively, compared to December. On the other hand, electricity prices actually dropped 17.5% in the first month of 2023.

When it comes to grocery shopping sugar is the product whose price has increased the most, jumping up by a massive 52.1% in the last 12 months. Butter, whole milk, fats and oils also passed the 30% mark while eggs and other dairy products, cereals and potatoes have become between 20.5% and 27.2% more expensive.

While the President of the Government, Pedro Sanchez, said this week that the VAT reduction will ease the pinch for consumers, General Secretary of the Unión Sindical Obrera, Joaquín Pérez, pointed out that Spain "continues to become impoverished month by month" and warned that the reduction in VAT "is not reaching the pockets."

"It is not and cannot be a luxury to eat fresh food," he stressed.

Along these same lines, a report published this week by the Foundation for Applied Economics Studies (Fedea) estimates that the VAT reduction will barely save 40 euros per household during the first six months of the year but will have a fiscal cost of 700 million.

On the plus side, the European Commission believes that Spain has passed the peak of cost increases and has actually revised downwards inflation for 2023, dropping it from 4.8% to 4%.

In other news: Batten down the hatches as another wave of Saharan dust is set to cover Spain

Image: Freepik

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