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FOOD AND DRINK

The foods that will increase in price in Spain in July 2024

The Spanish government's VAT freeze on certain food products is set to finish at the end of June, meaning several basic and essential items will get more expensive.

Published: 12 June 2024 09:16 CEST
The foods that will increase in price in Spain in July 2024
The Bank of Spain forecasts a 4.5 percent rise in food prices this year. (Photo by Amir ISAEV / AFP)

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.

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FOOD AND DRINK

‘Stress test’: Olive oil producers adapt to climate change

Olive oil producers are improving irrigation and seeking new varieties of olives to safeguard production as climate change upends harvests, causing prices of the staple of the Mediterranean diet to soar.

Published: 27 June 2024 16:58 CEST
'Stress test': Olive oil producers adapt to climate change

“Climate change is already a reality and we need to adapt to it,” according to the executive director of the International Olive Council (IOC) Jaime Lillo.

He spoke at the opening of the three-day olive oil congress in Madrid which brings together 300 participants from around the globe.

The gathering came as the world’s top olive oil producers, including Spain, Italy and Greece, have recorded an unprecedented drop in production over the past two years due to extreme drought and repeated heatwaves.

Global production of olive oil fell from 3.42 million tonnes in the 2021-2022 season to 2.57 million tonnes in 2022-2023, IOC figures show.

And according to data supplied by the organisation’s 37 member states, it is set to fall again in 2023-2024 to 2.41 million tonnes.

This has caused prices to soar by between 50 percent and 70 percent over the past year, depending on the variety concerned.

Prices in Spain, which supplies around half of the world’s olive oil, have tripled since 2021, to the dismay of consumers.

READ ALSO: Spain to eliminate tax on olive oil to ease price jump

‘Complex scenarios’

Olive oil has been an essential part of the Mediterranean diet for thousands of years. Spaniards for instance use it to cook and to season fish, salads, vegetables and other dishes.

“The rise in prices has been a particularly demanding stress test for our sector. We have never experienced anything like this before,” said Pedro Barato, the head of the Spanish Olive Oil Interprofessional Organisation.

“We have to prepare ourselves for increasingly complex scenarios that will allow us to face up to the climate crisis,” he added, likening the “turbulence” faced by olive producers to that experienced by the banking sector during the 2008 financial crisis.

The outlook is not encouraging.

Over 90 percent of the world’s olive oil production comes from the Mediterranean basin.

The United Nations Intergovernmental Panel on Climate Change (IPCC) has said this region is warming 20-percent faster than the global average.

This situation could affect world production in the long term.

“We are facing a delicate situation” which implies “changing the way we treat trees and soil”, said Georgios Koubouris, a researcher at the Greek Olive Institute.

“The olive tree is one of the plants best adapted to a dry climate. But in an extreme drought, it activates mechanisms to protect itself and no longer produce anything. To grow olives, you need a minimum amount of water,” said Lillo.

‘Find solutions’

Among the possible solutions raised at the Madrid congress is genetic research.

In recent years hundreds of varieties of olive trees have been tested to identify the species best adapted to higher temperatures.

The goal is to find “varieties that need fewer hours of cold in winter and that are more resistant to stress caused by lack of water at certain key times” of the year, such as spring, said Juan Antonio Polo, head of technology at the IOC.

The sector is also looking to improve water use by storing rainwater, recycling wastewater and employing technology to use less water to irrigate trees.

This means abandoning “surface irrigation” and instead using “drip systems” which bring water “directly to the roots of the trees” to avoid water loss, said Kostas Chartzoulakis of the Greek Olive Institute.

Farmers are abandoning production in certain areas that could become unsuitable for olive trees because they are too dry and moving them to other regions.

There has been a rise in new olive tree plantations, although on a small scale, in regions previously not used to grow the crop, said Lillo, adding that he was “optimistic” about the future.

“With international cooperation, we will gradually find solutions,” he said.

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