Spain’s September Shock: 49% Surge in Food Prices Despite Reduced VAT

In September, the Advocates for Consumer Rights (ACR) embarked on an intriguing mission.

The mission: closely scrutinising the ever-evolving landscape of nearly a thousand products affected by a VAT reduction within the vast domain of eight retail giants: Alcampo, Aldi, Carrefour, Dia, Eroski, Lidl, Hipercor, and Mercadona.

What seemed like a straightforward tax adjustment has sparked a fierce debate as the ACR raised concerns about potential profiteering.

The association has boldly called upon the Ministry of Consumer Affairs to wield its investigative powers and penalize companies that may be illicitly expanding their profit margins through these products.

Surprisingly, the findings of the ACR investigation reveal a startling twist in the tale.

Nearly half of the products subjected to scrutiny, approximately 48.9 per cent, have already experienced a price hike compared to their initial figures at the onset of the VAT reduction. This seemingly innocuous fiscal change, guided by a royal decree law, was meant to shield consumers from price surges.

However, the data suggests otherwise, as none of these products were supposed to see an increase unless justified by rising costs.

The plot thickens when we delve into the timeline of these price alterations.

The percentage of products affected by price hikes has been steadily climbing since the beginning of the year. In January, it was a mere 6.7 per cent, but by February, it had already jumped to 17.4 per cent.

The trend continued its upward trajectory with March at 30.8 per cent, April at 42.0 per cent, May at 43.8 per cent, June at 44.7 per cent, July at 47.0 per cent, August at 48.4 per cent, and finally, September culminated with an astonishing 48.9 per cent.

With this latest revelation, ACR is set to amplify its voice in the ongoing battle for consumer rights.

In mid-September, the association initially filed a complaint with the Ministry of Consumer Affairs. Now, armed with September’s damning evidence, ACR is pushing for a rigorous investigation into the products that have experienced unjustifiable profit margin expansions, something expressly forbidden by Article 72 of the royal decree law enacted in December 2022.

Interestingly, ACR’s efforts have highlighted a discrepancy in the authorities’ response. The National Markets and Competition Commission (CNMC), in a surprise move, declared that it lacked jurisdiction to take action against these practices, a stark contrast to Vice President Nadia Calviño’s earlier promise in December.

CNMC’s response arrived eight months after ACR’s initial complaint in January.

Therefore, ACR has now turned to the Ministry of Consumer Affairs, led by the stalwart Alberto Garzón, urging it to open an in-depth investigation to discern which products have experienced profit margin hikes, a clear violation of the regulations set forth in the royal decree-law.