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Price war between supermarket giants limits "VAT inflation"

24.03.2024 13:05
According to the Polish Press Agency and Business Insider, the ongoing price war between supermarket giants like Lidl and Biedronka will limit the inflationary effects of the planned return of 5% VAT on food. 
One of the supermarket giants in Poland - Biedronka.
One of the supermarket giants in Poland - Biedronka. Photo: Wikimedia Commons, Jacek Halicki

Since February 2022, there has been 0% VAT on food in Poland. This was part of a series of attempts by the previous Law-and-Justice-led government to get inflation under control before the 2023 general elections. Opinion polls consistently showed that PiS (Law and Justice) voters in particular treated inflation as a "deal breaker" when it came to the elections. 

The new government has reversed that policy, potentially adding 5% to food prices. However, in a stroke of luck for Tusk's government, the leading supermarkets are currently engaged in a price war. 

Lidl has announced that it will "take on" the 5% VAT, i.e. freeze prices at their current levels despite the new VAT and Biedronka is expected to follow suit. 

Sources: money.pl, PAP, Business Insider

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