Food prices in Spain were up in February despite IVA sales tax cut on some items
ECONOMY ·
Fresh fruits and vegetables topped the list of foods with the largest increase in price
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Fresh fruits and vegetables topped the list of foods with the largest increase in priceEdurne Martínez
Madrid
Tuesday, 14 March 2023, 17:57
Despite the IVA (Spain's sales tax) reductions in January, the price of food has continued to rise. In February the Consumer Price Index (CPI) for food stood at 16.6% according to data from the country's national institute of statistics (INE). This represents a 1% increase from the CPI in January.
The general rate remained at 6% in February, one-tenth below what was anticipated by the INE.
Given the recent rise in food prices, the Spanish government decided to reduce or eliminate IVA on some basic products. This cost-saving measure, which was applied from 1 January, had only a partial impact that month when food inflation remained at 15.4%, a rate that could have been "two per cent higher" if this measure had not been taken, said the Minister of Agriculture, Luis Planas.
However, February saw more increases in food costs across practically all products with reduced IVA. Bread was more expensive by 0.8% in February compared to the previous month, milk by 1.7%, cheese by 0.5%, eggs by 0.7% and potatoes by 2.3%.
Food items. where the IVA was reduced to 5% or 10% also increased in February. Olive oil became more expensive by 2.7%, bottled water rose by 4.4% and coffee by 2.3%.
The rise in food prices translates into an increase of 924 euros per year in the shopping budget according to the calculations of the OCU consumers association. The result of a recent survey by the group revealed that people in Spain have reduced their consumption of fresh products such as meat and fish by 32%, as well as fruit and vegetables by 18% due to higher prices.
The new data from the INE puts added pressure on the Government to introduce new measures to help lower prices. The head of the Ministry Agriculture convened the Food Chain Observatory where he urged all the players in the sector to help reduce prices. The Government has already pointed out that the measures to help the rise in prices - the reduction of IVA on some foods and aid to the agricultural sector - "have a long way to go”. They blame the rising food prices, especially in the case of fruit fresh, on a ”reduction in supply" in February due to unfavourable weather conditions in Spain and other European countries.
Government sources pointed out a few days ago that "we must wait" for the measures in force "to be fully deployed" to assess any additional action needed. The key date for the Government comes at the end of March, which is when the Ministry of Finance has the data for the final budget closure of 2022.
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