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Spanish supermarkets in trouble again for failing to lower prices
Consumer Affairs is doubtful that the VAT reduction on food is being passed on to customers in Spain
Have you noticed that your weekly grocery shop continues to get more and more expensive, despite government crisis measures to curb costs? This may be because some of the main supermarket chains are failing to pass on the full savings to customers.
Following numerous complaints from consumer groups about possible price increases on the back of the government VAT reduction, the General Directorate of Consumer Affairs has opened an investigation into the matter.
Over the past year or so, the Spanish government has either reduced or eliminated completely the VAT charged on staple items like bread, fruit and vegetables as costs continued to soar. Most recently, the tax on olive oil was slashed as the price per litre skyrocketed. However, if supermarkets are simply increasing the price tag on these grocery items to make up the shortfall, it really defeats the purpose.
In fact, the temporary application of the reduced VAT tax rate on certain deliveries, imports and intra-community acquisitions of food, which has been extended until June 2024, expressly prohibits this reduction from being totally or partially dedicated to increasing the business profit margin, since its main purpose is to reduce the price of food purchased by final consumers.
This isn’t the first time this issue has come to light either. In January of last year, Facua-Consumers in Action reviewed the prices of 676 items in Alcampo, Aldi, Carrefour, Dia, Eroski, Lidl, Hipercor and Mercadona and discovered that the VAT reduction hadn’t been applied to 52 products. Of all the major chains examined, only Mercadona had implemented the price reduction correctly.
This time around, supermarket and hypermarket chains have been asked to provide information on the pricing of all products which fall under the revised VAT rates and on their own profit margins.
Stores found to be in breach of the law could face fines of up to 100,000 euros, or between four and six times the illicit benefit obtained, for the most serious cases.
Image: Freepik
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