The Portuguese Association of Distribution Companies (APED) has called on the government to reduce VAT on essential products.
Speaking to Economia Online, the director general of APED, Gonçalo Lobo Xavier, said that the 2022 state budget proposal does not “adhere to reality”, as it was prepared in October and November 2021.
Lobo Xavier called for an “aggressive fiscal policy” to combat the effects of the war in Ukraine.
According to the director general of APED, the Portuguese government “is too slow” in responding to the crisis, noting that other EU member states are “much more agile and effective”, particularly with regard to lowering the VAT on essential goods.
Although he expects the prices of food products to rise, on average, by up to 30% by the end of the first half of 2022, Lobo Xavier provided reassurances that retailers are not increasing their margins, despite production costs increasing by up to 20%.
According to Lobo Xavier, it is important to seek sources of raw materials in other countries, in order to reduce the great dependence on cereals coming from Ukraine and energy from Russia.
He pointed out that grain costs have already dropped compared to a month ago, but this effect will only be felt in consumers’ pockets in one to two months.
As for stocks, there are no concerns from the supply point of view, while limits on the sales of some products have been lifted, both in wholesale and retail. On the other hand, prices are different to those from six months ago.
Products On Promotion
Commenting on the Portuguese food retail market, Lobo Xavier said that it is the fifth in Europe in terms of products purchased on promotion, with 49% of food retail sales resulting from products on promotion.
In terms of consumer trends, Lobo Xavier notes an increasing appreciation of Portuguese products, which is especially visible in the fresh fruit and vegetable segment.
He expects a loss of purchasing power in the coming months, and, therefore, a retraction in consumption.
APED represents a group of more than 180 companies, of which 60 are in the food sector.