Spain has scrapped VAT on staple food items for six months as part of a series of new measures to help the population to cope with the rising cost of living.
Prime Minister Pedro Sánchez announced at the end of December that the VAT would be reduced from four per cent to zero on essential items such as bread, bread flour, milk, cheese, eggs, fruits, vegetables, legumes, potatoes, and cereals.
Similarly, the tax has been reduced for olive oil and pasta from 10% to 5%.
One-Off Aid Package
Spain’s Council of Ministers also approved a one-off aid of €200 for more than 4.2 million low-income families in addition to €300 million in direct aid to farmers to compensate for the increase in costs due to the increase in fertiliser prices.
The new anti-crisis aid package is worth €10 billion, bringing the government's total expenditures on aid measures to €45 billion.
In recent months, the Sanchez government has heightened its efforts to contain inflation, which has soared throughout Europe, especially as a result of the ongoing war in Ukraine.
Inflation has been moderating in Spain since reaching a record 10.8% year-on-year in July, as it stood at 6.8% in November.
Despite this, food prices have resisted falling, rising 15.3% year-on-year in November.
Elsewhere, a €0.20/litre discount on fuel approved for all consumers in previous relief packages has now been limited to the most affected sectors, such as transporters, farmers, shipping companies and fishermen.
© 2023 European Supermarket Magazine – your source for the latest Supply Chain news. Article by Branislav Pekic. Click subscribe to sign up to ESM: European Supermarket Magazine.