To fight inflation, Portugal has temporarily abolished VAT on 46 staple foods. The measure decided by the left-wing government came into force on Tuesday and should initially apply until October 31. The suspension of VAT on food applies to products such as bread, pasta, rice, cow’s milk, eggs, yoghurt, cheese, oil, butter, meat and fish and may be extended. The initiative is part of an agreement signed with producers and retailers at the end of March, which also provides financial support for farmers and livestock farmers. The package of measures will cost the state around 600 million euros.
Prime Minister António Costa visited two larger chain supermarkets in Lisbon to check whether the tax savings were being passed on to customers. The socialist drew a positive first conclusion, but emphasized: “We must continue to monitor developments and take all necessary and possible measures to protect families’ incomes.” The conservative opposition leader Luís Montenegro criticized the measures and said that income tax should be lowered.
In March, consumer prices in Portugal rose by 7.4 percent compared to the same month last year. Inflation was thus similar to that in Germany. In Portugal, however, many people have less leeway when it comes to spending due to significantly lower salaries. The VAT on most groceries is six percent in the southwestern European country.
