The reductions in VAT are still not enough to contain the escalation of food prices. In July they became more expensive and contributed to inflation, after two months of decline, experiencing a rebound, reaching 2.3% in year-on-year terms, compared to 2.9% in June, according to the data published yesterday by the INE.
The price increase is particularly pronounced in products such as sugar, olive oil and milk, which have registered increases in the last twelve months of up to 44% and do not give way in an upward sequence that began not long after the beginning of the invasion of Ukraine.
The INE data can be read in two different ways. The first is to see what prices did in July compared to June. That month, the most important increase was mainly that of tourist packages, of 16%, ahead of fuels, which increased by 6.5%. They are, in short, increases due to the arrival of the holidays and the good tourist prospects.
Also in July compared to June, food went up by 0.8%, four times more than all prices, which did it by 0.2%. It was an increase in which fruit, with an increase of 8.8%, became the protagonist, conditioned in part by the worst harvest and the drought.
The other way to see the INE data is in year-on-year terms, which clearly shows what has happened in the last year. It is here that food, with an increase of 10.8%, stands out from the rest of the categories and becomes the factor that interrupts price moderation.
All the food groups analyzed by the statistics institute have become more expensive in the last year, but some have done so dramatically. This is the case of sugar, which contributes to raising the price of many other processed products and which has continued to rise in international markets practically since the beginning of the war in Ukraine.
Olive oil has become more expensive by 39% in the last year and, according to the latest bulletin of the Ministry of Agriculture dedicated precisely to monitoring its price, it already costs seven euros per liter on average, 2.5 times more than four campaigns ago.
This product completes, with the rest of oils, milk, potatoes and pork, the list of those that have risen the most in the last year, all by over 15%. There are other foods that go up less, such as poultry, fish and bread, but the tonic is widespread moose. Only one, cereals, evolves below inflation.
The second vice-president and acting Minister of Labor, Yolanda Díaz, assured yesterday in a message on Twitter, now known as X, that the increase in food since before the pandemic is already 31% and that ” it is necessary to act on business margins” to “protect the public”.
The Central Government has adopted different measures to contain the effect of the increase in food on consumers, especially the reduction of VAT to 0% for basic necessities and the reduction of this tax from 10% to 5% in pasta or oils.
The doubt was whether the measure was being complied with and whether supermarkets were correctly transferring this reduction in VAT to the final price, but the National Markets and Competition Commission (CNMC) has just dispelled it by publishing a report in which it concludes that yes it is so. It is still support for a measure that will be in place at least until the end of the year, as long as core inflation, which excludes energy and fresh food, remains above 5.5%.
This underlying inflation, according to data also published yesterday by the INE, stood at 6.2% in July, three tenths more than a month earlier. Since the end of last year, this inflation indicator has been higher than that of the general one, the peak of which was reached precisely in July of last year, with 10.8%, and that since ‘then it has been moderated.
There are other support measures to deal with the increase in food, such as the check of 200 euros to help cover the consumption basket for families with an income of less than 27,000 euros. The OCU yesterday asked the central government to “urgently and substantially” raise the amount and number of beneficiaries of this aid. From the confederation of CECU consumers agree to claim an increase in aid.
The CEOE also reacted yesterday to warn that fuels and second-round inflationary effects linked to the rise in wages may cause new price increases. The UPTA freelancers charged against “the boundless voracity of the big food marketing companies”.
