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Date Published: 15/05/2023

Food prices in Spain finally drop in April

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Half of grocery items are still more expensive in Spain than before the VAT cuts

Food prices in Spain finally drop in April

The incessant increase in the price of food finally took a bit of a breather during April, when the grocery bill ‘only’ rose by 12.9%, which is 3.6 points less than the 16.5% reached in March despite the VAT reduction on many staple items.

However, the data published on Friday May 12 show that households continue to pay 13% more for food than they did a year ago.

This is the lowest price groceries have reached since June 2022, but the ongoing drought is badly affecting cereal, fruit and vegetable crops all across Spain and a slow harvest could spike costs again this summer.

Ironically, the January 1 VAT reduction on staple grocery items like oil, bread and milk has done little to mitigate inflation, and more than half of basic shopping products are more expensive now than before the cuts.

And prices continued to creep up in April, albeit more slowly than in recent months.

The foods that took the biggest jumps were milk (+27.6%), olive oil (22.2%), cereals (18.2%), potatoes (16.5%), pork (16.1%) and eggs (15.8%), but the stand-out has been sugar once again, which skyrocketed by 49.6%.

At the same time, the price of energy continues to decline (-15.6%), as does the cost of fuel (-4.3%).

Although the April savings were slight, the Ministry of Economy believes that the data show that the VAT reduction measures are beginning to kick in and "are damping the evolution of inflation."

And despite costs feeling extortionate to the average consumer, Spain remains among the EU countries with the lowest inflation, which "is favouring the competitiveness of Spanish companies, as evidenced by the gains in market share and the increase in exports of goods and services, even in the complex international economic context.”

When food inflation will finally begin to cool off is anyone’s guess, but the data suggests that it won’t be this year. In fact, the Bank of Spain has already forecast a 12.2% growth in food prices by the end of 2023.

In other news: Spain launches National Plan to reduce the impact of heatwaves

Image: Freepik

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