Helping combat rising food costs

The zero IVA basket was created as a part of an initiative to help mitigate rising food prices, and came into place on March 27. The agreement is set to remain in effect until October 31st, providing temporary relief to consumers. The price of the basket is monitored by DECO PROTESTE.

Basket based on foods commonly eaten by Portuguese families

The list of foods exempt from IVA was defined based on the recommendations of the Directorate-General for Health. It includes the foods most consumed by families in Portugal, according to information provided by the association representing food distribution companies.

Since the exemption came into effect, the cost of this basket has fallen by 10.23 euros, reflecting a decrease of 7.37 percent. Over the course of the year, the decrease stands at 5.13 euros, equivalent to 3.84 percent.

Some food prices still rising

Not all foods have decreased in price as a result as the rise in the prices of certain food items surpassed the reduction resulting from the zero VAT rate

The cost of some of the foods listed rose before the Zero IVA measure was introduced. Broccoli, for example, rose 0.45 euros (19%) between the day before the measure was implemented, April 17, and June 28 and the gala apple rose 16%, rising by 31 cents.

Hake saw biggest price increase

According to DECO PROTESTE's monitoring of the basket of goods from June 21 to June 28, several items experienced the highest price hikes. Fresh hake took the lead with a significant increase of 30%, followed by cauliflower (7%), tomatoes (6%), sea bream (5%), bread rolls (4%), packaged sliced Flemish cheese (3%), turkey leg, long-grain rice, and broccoli (2%), and semi-skimmed UHT milk (1%).

Analysing the past week, the top ten products with the highest percentage increases were fresh hake (30%), cauliflower and sliced turkey breast (7%), tomatoes (6%), heart cabbage, sea bream, and dry garlic (5%), whole grains and bread rolls (4%), and Flemish cheese (3%).

While the VAT exemption on essential food items was implemented with the intention of alleviating the financial strain on consumers, the overall impact remains limited.

Food prices unpredictable

The volatility of food prices has caused certain products to become more expensive, outweighing the reductions that have come as a result of the VAT exemption. However, with the exemption set to remain in place until October 31st, it's hoped that it will still provide relief in the face of rising food costs.