Lidl and Aldi have become the first supermarket chains in Poland to announce that they will lower the prices of thousands of their products in response to the government’s decision to suspend VAT on food, gas and fertiliser as a way to soften the blow of soaring inflation.
After announcing the tax cuts last week as part of the government’s latest “anti-inflation shield”, Prime Minister Mateusz Morawiecki warned that for them to translate into lower consumer costs – estimated at 45 zloty (€10) per month for the average household – retailers would need to lower their prices commensurately.
“Everyone who sells these products [covered by the VAT reduction] should lower their prices on these items,” said Morawiecki. He appealed to shoppers to check that this was happening and also declared that retail inspectors and the anti-trust authority would monitor prices.
In response to the call, Lidl has announced that it will cut the price of 2,000 products. The chain did not publish a detailed list, but said that cheaper products would include milk, butter, cream, bread, apples, carrots and potatoes, as well as garden soil, fertilisers and plant care products.
The chain also noted that, according to an ASM Sales Force Agency report published in December, the price of a basket of basic goods at its stores dropped by 5.13% last year despite growing inflation.
Another discounter, Aldi, has followed suit, announcing that it would lower the prices of around 2,000 products from 31 January, a day ahead of the VAT cut. “We are not waiting, we are a step ahead,” said Adam Łopatka, the firm’s director of category management, quoted by Interia.
However, retailers have emphasised that, going forward, there are many other factors beyond their control that will weigh on prices. These include rising gas and electricity costs, supply chain issues, as well as obligations to suppliers and contractors, which may force some shops to raise prices, rather than lower them.
Experts have also warned that, after the VAT cuts expire (which is currently due to take place after six months), inflation could be driven up to over 10%, reports Radio ZET. In December, it reached 8.6%, its sixth consecutive monthly rise and the highest level since November 2000.
In November, the government announced a previous package of anti-inflation measures worth up to 10 billion zloty, which included reduction in the excise tax on fuel, lower VAT on gas and electricity, as well as a special allowance for around five million households.
Main image credit: Witoldstech/Wikimedia Commons (under CC BY-SA 4.0)
Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.
