Economy, Agriculture and Competition meet to monitor prices and there is a meeting with the entire sector before the end of this month
The cabinet does not want the VAT reduction approved by the Council of Ministers to be weakened before 1 January for consumers who feel that they do not notice the measure in their daily purchases. Although it is legally required to set the new taxes (0% for eggs, vegetables, fruits, legumes, bread, cheese or milk, and 5% for pasta and oil), the case histories of each store or supermarket make it a tough one. task of price monitoring. For this reason, some of the ministries involved in the measure have started the year with meetings in which they primarily want to monitor the application and evaluate its effect, without losing time. Moncloa wants when inflation data is released for January it will already reflect the reduction in food.
To do this, the first step was taken this Tuesday with the meeting of the Secretary of State for Economic Affairs, the Ministry of Agriculture and the National Commission for Markets and Competition (CNMC) in a meeting aimed at “refining and strengthening” all instruments they have to ensure that the VAT reduction measures are reflected in the final price of food. The economic vice president, Nadia Calviño, on Tuesday insisted on the need to ensure the pass-through of VAT reductions in the final price of food, thereby “resulting in an improvement in the situation of Spanish families”.
Some reports prepared by consumer associations, such as Facua, sued seven distribution chains before the CNMC for failing to pass on the VAT reduction. And another organization, Asufin, found out how many distribution chains “round the discounts in their favor and don’t get the right percentage.”
In this context, Minister of Agriculture Luis Planas will not let a month pass after the introduction of the VAT reduction on basic foodstuffs to check how companies apply the measure; analyze what disruptions can occur when reducing the load; and assess whether the cut will lead to a reduction in the food price and thus the high underlying inflation in Spain.
Planas will convene the Food Chain Observatory, the only legal body in which all agents related to the price of food and VAT reduction can sit. At that table, which has not been activated for a year, are the Ministry of Agriculture itself, as well as the Ministry of Finance, autonomous communities and town halls; The representatives of agricultural organisations, the fisheries sector, the agri-food industry, the main distribution associations and consumer organizations also have seats. A whole conclave that will serve to determine to what extent customers will notice the VAT reduction that started on 1 January in their daily purchases.
The department led by Planas will arrive at that meeting with the first inflation data provided by the National Institute of Statistics (INE) covering the month of January. It will be the cotton test on which all attention will be focused to determine the effects of the VAT reduction in the first four weeks of implementation. From Agriculture, they are confident the move will be spotted in January CPI data, after the data shows how food prices have risen by more than 15% over the past year, compared to headline inflation of 5.8% through December , and an underlying (with no energy or unprocessed food) close to 7%.
For the time being, consumers feel that they will not notice much of the new VAT. The volume of each purchase is small to receive the measure, as was the case with the bonus of 20 euro cents per liter filled.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
