Food Chains in Sweden Promise Price Cuts with VAT Reduction

Published:

Food Chains in Sweden Promise Price Cuts with VAT Reduction
Photo: Depositphotos

Food chains promise price reductions as large as the reduced VAT. Coop will reduce prices corresponding to the VAT reduction, says Anders Torell, CEO Coop Sweden. Approximately 600 kronor lower food costs per month for a family with children, the message means.

Also Axfood and Ica promise lower prices.

We will of course work to make this have a full impact in the stores, says Ica Sweden's CEO Eric Lundberg.

Karin Brynell, CEO of the trade organization Swedish Daily Goods Trade, reminds that the last time Sweden reduced food VAT, 1996, when from 21 to twelve percent, the VAT reduction had a full impact, something the Swedish National Audit Office noted in a previous study.

80–90 percent

Olle Holmgren, chief strategist at the bank SEB, believes that most of the VAT reduction will have an impact this time as well.

I would guess that the VAT reduction will have an impact of 80–90 percent in any case, he says.

But the VAT does not live its own life. Other things also affect food prices. According to Holmgren, there is an underlying price increase trend for food, which is expected to end up at around two percent in 2026. How it actually develops affects the store prices of food.

It also depends on how other costs move, says Karin Brynell, who, like the food chains, welcomes proposals for regulatory simplifications and a food price commission.

Five percent lower prices

The food VAT is thus reduced on April 1, 2026, from twelve to six percent, according to the government's budget proposal. Mathematically, this means 5.4 percent lower food prices, provided that nothing else happens.

This would result in approximately 600 kronor lower food prices per month for a family with two children, according to Swedbank's calculations based on necessary food costs. For a single parent, it lands at around 400 kronor and for a single household 200 kronor lower food costs per month.

Will people then buy more food?

People are having a pretty tough time today. And with this support, consumers will have the opportunity to buy more food, says Coop CEO Anders Torell.

Several winners

Do you think it will lead to changed behavior, maybe go from macaroni to fine pasta?

I think that those who cannot afford to buy anything other than macaroni will be able to have a variety on their plate, but it will not lead to luxury consumption.

If the food stores can sell more when the tax is reduced, it also means increased revenue and thus higher profits.

We are a very volume-based industry with extremely low margins. In the end, it's a win-win, says Eric Lundberg at Ica.

Loading related articles...

Tags

Author

TTT
By TTEnglish edition by Sweden Herald, adapted for local and international readers
Loading related posts...