The shopping basket, immune after the first month with the VAT reduction

by time news

The VAT reduction on basic food has not yet had any effect on the high shopping basket that Spaniards have been burdened with in recent months. Not for good. Not bad. The prices of products such as eggs, bread, milk or oil have wandered on their own on the slope of January 2023. And they have not exactly made it easier to overcome this first month of the year, usually conditioned by the high expenses of the Christmas and weak economic expectations.

After weeks of negotiating the measures of the third major government package to cushion the effects of the crisis caused by the war in Ukraine and the escalation of prices, food inflation shows no signs of abating. In the absence of knowing the definitive CPI data for January –it will be known on the 15th–, there is nothing to suggest that trips to supermarkets have been cheaper than at the end of last year. Food inflation closed December above 15% –the general rate is now at 5.8%– and, with the data obtained by this newspaper in some of the large distribution chains, the new VAT has hardly been noted on the purchase receipt.

Of the seven basic products analyzed and compared weekly from the beginning of January until this very week, the conclusion is firm:_prices have barely moved. And if they have, in some cases, to go up. They are the least. Like the PVP (Retail Price)_which have really gone down this month. Only in very specific circumstances. And just one or two cents.

Of those thirty products analyzed in four chains (bread, eggs, zucchini, apple, flour, olive oil and macaroni), only in eight cases has a price variation been verified this month. Half to raise them and the other half to lower them with respect to the references of January 1.

In this same period, the reports on food prices prepared by the Ministry of Agriculture reflect a large fluctuation in costs, upwards in the first half of January and further downwards in the second part of the month. Although those quotes do not go directly to the shopping cart.

When the Executive approved the VAT reduction from 4% to 0% for bread or milk, among others, and from 10% to 5% for oil, among other products, different calculations estimated that this measure would mean an average saving of about two euros a month.

Consumer organizations such as the OCU have warned this month that distribution companies have applied unfavorable price rounding to the consumer, cheap products that disappear, forcing the user to purchase a more expensive brand, real VAT reductions not applied , and even price increases.

The perception is that the shopping basket has ignored this measure of a fiscal nature. Why?_Fundamentally, as explained by Javier Millán-Astray, general director of Anged (National Association of Large Distribution Companies), because “as Minister Planas has pointed out, there is still a margin in this quarter for it to begin to show the moderation of prices in the shopping cart”. The person in charge of this organization points out that “it will be in a few weeks”, but not yet.

Different sources in the value chain of food and processed products insist that they are still bearing very high costs. And when they talk about costs they refer almost exclusively to energy, transport and raw materials. In the first case, because the electricity contracts signed at the time have not yet expired. And they were initialed with very high prices, which registered both electricity and gas in records during last summer, in many cases. Linked to this reality of long-term contracts are a part of the transport costs of suppliers, whose prices are established by quarters. And because although prices of raw materials have fallen in international markets (this is indicated by records such as those of the FAO), these low costs take time to be transferred to the final product. “There is still significant price pressure in the industry,” according to Anged.

All producers, farmers, ranchers and above all the food industry and distributors are grateful for the VAT reduction. But it has barely served so far for the consumer to notice this measure. On the horizon is an additional cut in VAT_ on meat and fish, as some opposition parties are asking the government. Or the price limitation itself, based on a shopping cart with limited costs, as Vice President Yolanda Díaz insists. The evolution of the shopping basket will determine what the next step can be to take to avoid escalation in stores while the rest of the costs continue to fall slowly.

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