The Lidl supermarket chain announced that in April it will maintain the prices of more than 1,600 products at the current level Despite the end of the zero VAT rate on food items. The Aldi chain has also made a similar decision.
“In April, we are leaving the prices of all products subject to increases in the VAT rate to 5% at the pre-increase level,” he wrote on Lidl’s website. The network's decision includes, among others, the following: fruits, vegetables, dairy products, meat and cold cuts.
Aldi announced a similar decision a few days ago. In April, the prices of products in the basic shopping cart will not be increased with VAT.
Products without increased VAT at Aldi include: M. in.: Bread, fresh meat, butter, milk, eggs, cheese, flour, bulgur, rice, oils. “The decision not to increase VAT prices for such a wide range of products is another step in our series towards making it easier for Poles to save. This is our priority, which is why we constantly monitor the market situation and always guard good prices,” Aldi said.
The government recently decided to stop applying VAT on food items as of April 1, which means a return to the previous rate of 5%. Rates. The zero rate has been maintained since February 2022 as one of the main elements of the so-called anti-inflation shield, which artificially lowered the consumer inflation index (CPI).
The rate returns to 5 percent. A tight budget results in: large expenses and revenues, which may be slightly less than assumed in the budget. It turns out that zero VAT is expensive for state coffers, because according to… The estimates in 2022 meant a loss of PLN 8.5 billion, and in 2023 it amounted to about PLN 11 billion.. The Ministry of Finance recently indicated that this cost will reach PLN 2.9 billion for three months of 2024. It can therefore be estimated that the remaining three quarters of this year will generate approximately PLN 9 billion in revenue for the state budget thanks to the restoration of the standard rate.
What about inflation? Economists previously estimated that – if there was no price war between discounters – the effect of returning the VAT rate to 5 percent would translate into an increase in CPI inflation of about one percentage point compared to April. (In February, inflation was 2.8% and in March it may be less than 2.5%). However, mass promotions in discount stores and recent announcements from chains such as Aldi and Lidl suggest this impact will be less. The question is how Biedronka will behave and what impact these decisions will have on other stores (other chains, independent and small outlets as well). It is also unknown how the Central Statistical Office will be able to capture this phenomenon.
See also: Rival Biedronka and Lidl are watching the price war from the sidelines, but it's still getting beaten up. Billions evaporated
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