Portugal's second-largest retailer Jerónimo Martins urged the government on Thursday to cut the value added tax on basic food products and promised to reduce its domestic prices accordingly, saying the anti-inflation measure was long overdue.
"The government should have done this more than a year ago," said Isabel Ferreira Pinto, chief executive at the company's main domestic supermarket chain, Pingo Doce. "We will fully pass on the VAT reduction to the price of products."
Prime Minister Antonio Costa told parliament on Wednesday his government was working with sector representatives to reduce food prices and acknowledged the possibility of lowering the VAT on food products, without giving further details.
The government had previously said lowering the 6% VAT on basic food products was not a priority even as food inflation is hitting households hard. Consumer inflation was 8.2% in February, with food inflation recorded at more than 18% in January.
"The state was the one that most collected (in taxes) and did the least for the people," Jerónimo Martins CEO Pedro Soares dos Santos told a news conference, adding that a tax reduction would restore some of families' lost purchasing power.
The retailer on Wednesday posted a 23% rise in fourth-quarter net profit as soaring inflation boosted sales especially in its largest market Poland but also dented its margins.
Despite high inflation, an economic downturn and rising interest rates, the company will keep investing in the expansion of its existing operations and also could enter a new market in Slovakia soon.
Luis Araújo, head of the Polish unit Biedronka, which is the largest food retailer in Poland, said many Slovak consumers were already crossing the border to buy at Biedronka, and the company has been "looking carefully at Slovakia" for expansion.
"We are prepared to seize the opportunity in a very short time," he added, without providing further details.
Jerónimo Martins has €2.5 billion in investment earmarked for Biedronka and €1 billion for Colombia over the next five years, while Pingo Doce would get €1 billion over the next three years, Soares dos Santos said.
News by Reuters, additional reporting by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.