Poland may extend its zero VAT rate on food staples into 2024 if inflation persists, Prime Minister Mateusz Morawiecki said at the weekend.
Poland slashed taxes on a long list of products from fuel to fertiliser to help consumers cope with surging inflation, but had to return to higher taxes on gasoline this year in line with European Commission rules.
However, Brussels has allowed VAT on food staples to be kept at zero.
General Election
While inflation slowed to 14.7% in April from 16.1% in March, according to a flash estimate from the statistics office, it remains a key political issue in the run-up to a general election this year.
"If inflation doesn't fall very significantly, it's not excluded that in the fourth quarter of this year we will make a decision to extend this relief for the next year," Morawiecki told a news conference.
The decision will be made when inflation data for this year and forecasts for 2024 will be available, the prime minister said, adding that the measure costs around 10 billion zlotys (€2.18 billion) a year in lost budget income.
Retail Sales Data
Poland saw disappointing retail sales and industrial output data in the first quarter, according to data published last month.
Compared to the anticipated 5.9% decline, Poland's retail sales at constant prices fell by 7.3% year-on-year in March, while industrial output declined by 2.9% instead of the predicted 1.9%.
In addition, the Producer Price Index (PPI) decelerated to 10.1%, below the estimated 11.0%.
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