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Food prices in Spain rise 16 percent despite VAT cut

The Local Spain
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Food prices in Spain rise 16 percent despite VAT cut
Food prices in Spain have risen by 16 percent in the last year. Photo: PIERRE VERDY / AFP

The cost of the weekly shop in Spain was 16.6 percent more expensive in February than it was last year, new data shows.

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Food prices have risen again in Spain due to the rate of inflation, which rose to 6 percent according to new figures from Spain’s National Statistics Institute (INE) released on Tuesday March 14th.

At the same time, core inflation rose to a new maximum, after rising one-tenth to 7.6 percent. The rise has been felt mostly through food prices, whose Consumer Price Index (CPI) has registered a new all-time record, reaching 16.6 percent, despite the VAT reduction introduced at the start of 2023.  

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According to data published this Tuesday, prices in February were six percent more expensive than twelve months earlier. This is the second consecutive month of rise, although it remains 4.8 points below the highest rate of 10.8 percent reached in July 2022. 

In February alone, prices rose 0.9 percent, the biggest monthly rise since June 2022 and the biggest rise for a February since 1980.

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Inflation has had the most pressure on the price of the weekly shop. Food has become more expensive by 16.6 percent in the last year. This is the highest interannual rate since January 1994.  

The Organisation of Consumers and Users (OCU) has estimated that this translates into an extra annual cost of €924 and has urged the government to "urgently and substantially” increase the cost of living subsidy of €200 per year for vulnerable households.

READ ALSO - UPDATE: How to get Spain’s €200 cost-of-living subsidy

This is despite the reduction in VAT on some basic food products that the government approved at the beginning of the year.

The VAT reduction affects products including oil and pasta, which the government has cut VAT on from 10 to 5 percent for six months.

The 4 percent VAT for staple foods, such as bread, milk, flour, cheese, eggs, fruit, vegetables, legumes, potatoes and cereals, has also been abolished. Economy Minister Nadia Calvino said the weekly shop had begun to stabilise, but instead food prices have continued to rise. 

The rise in prices has especially affected fresh vegetables, which have become 11.2 percent more expensive in the last month alone.

The Ministry of Economic Affairs, however, argues that the price of fresh products has increased due to problems in the supply as a result of unfavourable weather conditions, in Spain and other EU countries.

The greatest increase has been seen in sugar, whose price has risen by 52.6 percent in the last twelve months, followed by butter, sauces and seasonings, olive oil and whole milk, with annual increases of over 30 percent.

The cost of eggs, fresh vegetables, cereals, dairy products and potatoes have also increased between 21.2 and 28 percent.

The INE attributes the increase in prices to the increase in the cost of electricity, package holidays and food. The price of electricity has risen by 12.6 percent in the last month alone. Even so, the price of electricity is 33 percent cheaper than a year ago.  

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