The billion-dollar package of anti-crisis measures announced by Prime Minister Sánchez on December 27 has a direct impact on the shopping basket. The Spanish government has decided that from 1 January VAT will no longer be levied on a large number of foodstuffs.
War and inflation have created a perfect storm. The prices of gas and electricity, but also of daily groceries, are shooting through the roof. Earlier this week, the Spanish government presented a support package, support that will be felt immediately when food shopping.
VAT on primary foodstuffs will be temporarily abolished
The Spanish government has decided to temporarily lower the VAT on primary foodstuffs to 0%. For the time being, this measure will apply from 1 January 2023 and will remain in force until 30 June. In the coming six months, it will be investigated how effective this measure is and whether it should be extended.
According to data from the National Institute of Statistics in Spain (INE), groceries have become 15.3% more expensive in November alone compared to the same month in 2021. In one year, the prices of basic products such as milk and bread have risen more than 30%. Vegetables, fruit, cheese and eggs have become between 10% and 20% more expensive compared to a year ago.
Which foodstuffs are subject to the temporary abolition of VAT?
Basic products will be temporarily exempt from VAT. This mainly concerns fresh products such as bread, flour, milk, cheese, eggs, vegetables, fruit, legumes, potatoes and grains. Furthermore, the VAT on meat and fish will be temporarily reduced to 10%. In the case of olive oil and pasta, the VAT will temporarily be 5%. The current VAT of 21% will be maintained for most secondary foodstuffs, which also applies to tobacco, alcohol and soft drinks.
However, the Spanish government is not only tinkering with the VAT of foodstuffs. Around 4.2 million families in Spain will also receive a one-off compensation of €200 for groceries. This only applies to families with an annual income of less than €27,000.
Also read: Government announces aid packages and promises to curb food prices
