Lidl Holds Prices as VAT Exemption on Food Ends, Eases Consumer Worries

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National Treasury won't exempt list of zero-rated VAT food items.

As the zero VAT exemption on food comes to an end shortly after Easter, concerns about potential price hikes loom large for many Poles. However, customers of Lidl can breathe a sigh of relief as the retail chain pledges to maintain current prices on over 1,600 products, ensuring stability in household budgets amidst economic uncertainty.

The Ministry of Finance’s decision not to extend the zero VAT on food means that the standard 5% rate will be reinstated at the beginning of April. This move comes as inflation, once a pressing concern at 10%, has notably receded, with February’s figures from the Central Statistical Office showing a significant drop to 2.8%, the lowest in three years.

According to a recent study by ARC Rynek i Opinia, nearly 70% of Polish consumers express fear over potential food price increases post-Easter, reflecting widespread apprehension about the economic impact.

In response to these concerns, Lidl has launched the “VAT STOP” campaign, committing to maintain prices on essential food items including bread, fruits, vegetables, meat, and cold cuts. Aleksandra Robaszkiewicz, Head of Corporate Affairs and CSR at Lidl Polska, underscores the company’s dedication to offering affordability during uncertain times.

Meanwhile, anticipation mounts regarding Biedronka’s response amidst a prevailing price war between the two retail giants. While CEO Luis Araujo expressed surprise at the government’s decision to reinstate the 5% VAT rate, he emphasized the need for consumer demand to drive such fiscal adjustments, particularly given the impact of private consumption on economic performance.

The zero VAT on food, initially introduced in February 2022 to mitigate the effects of soaring inflation, had been extended multiple times until its expiration in December last year. Its cessation marks a significant shift in fiscal policy, prompting retailers like Lidl to proactively address consumer concerns and maintain stability in the face of changing economic landscapes.

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