Spanish supermarkets reject price cap and call for reduction in VAT instead

A proposal by a member of Spain’s government to establish a price cap on certain basic products to protect households amidst rising inflation has been met with a firm response by supermarkets. The proposal would involve a basic shopping basket of about 20 or 30 products with set maximum prices. But retailers have rejected the idea, calling instead for a lowering of VAT.

Ignacio García Magarzo , president of the Asedas employer association, which includes chains such as Mercadona, Dia, Lidl, said: “Companies are suffering a lot and there are companies and distribution chains, especially small ones, that this year may make losses as a result of the increase in energy and the price they are paying for electricity.”

Minister of Agriculture, Fisheries and Food, Luis Planas, seems to agree with the retailers, stating in a recent interview that such a price cap would not fall within the current European legal framework nor would it be desirable. He also ruled out imposing a tax on the distribution sector, but called for price rises to be as limited as possible.