Price war between supermarket giants limits "VAT inflation"

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.

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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