Food VAT cut fully lowered prices, inquiry finds

The spring halving of Sweden’s food VAT fully reached consumers through lower grocery prices, according to a preliminary report from the Swedish Consumer Agency and the National Institute of Economic Research, reported by SVT.

Food prices fell by 5.5% when the VAT was reduced, matching the expected effect of the tax cut. The lower prices have since remained in place, the agencies said.

“This broad price decline suggests that the VAT reform affected the entire range of food products, rather than just a few items,” said Lena Aronsson, director general of the Swedish Consumer Agency.

The findings are consistent with earlier measurements by Statistics Sweden and the food industry.

Prices fell across all food categories, although the size of the decline varied. Oils, fats and non-alcoholic drinks saw the largest reductions, while the decreases were smaller for meat, vegetables and sweets.