On June 30th the Spanish government will end its VAT rebate on certain food products, making several basic foodstuffs more expensive overnight. The measure was first approved by the government as part of a package of measures aimed at alleviating the economic consequences of the war in Ukraine and supporting low-income families amid high inflation.

In January 2023 VAT was cut on certain products that were already at the reduced rate of 4 percent, and in addition, VAT on oils (including olive oil, which was later reduced to 0 percent) and pasta were lowered from 10 percent to 5 percent.

However, after the policy was extended through the entire first half of 2024, the normal VAT rates are set to come back into force from July 1st if the government doesn’t further extend it, something that now seems unlikely.

READ ALSO: Why is olive oil cheaper overseas when Spain is the world’s top producer?

Foods that will get more expensive 

The foods that were included in the VAT reduction and will therefore now get more expensive from July include:

• Plain bread, as well as frozen plain bread dough.
• Flours
• Milk: natural, certified, pasteurised, concentrated, skimmed, sterilised, UHT, evaporated and powdered
• Cheeses
• Eggs
• Fruits and vegetables
• Cereals
• Olive oil and seed oils.
• Pasta

This comes amid shocking consumer watchdog findings that show the price of food in Spain is, in extreme cases, up to 875 percent more expensive when sold on supermarket shelves than it is at source. This is according to a Facua-Consumers in Action press release on Tuesday.

According to the study, a kilo of lemons at source was priced at €0.20, yet the price per kilo in supermarkets is, on average, €1.79 — 695 percent more expensive. A kilo of lentils was found to cost on average 369 percent more in supermarkets than what the farmer is paid for the same product (€0.76/kg). 

Some Spanish economists argue that grocery shopping has become more expensive for Spaniards than for other Europeans because they tend to consume products that are increasing in price the most, particularly olive oil. 

The Bank of Spain has also pointed out that a preference for fresh produce in Spanish households has forced many to decide between eating healthily and cutting costs.