Due to the latest inflation readings and forecasts of the dynamics of prices of basic food products subject to the transitional 0% VAT rate, the Ministry of Finance decided not to extend the temporary reduction of the VAT rate on basic food products after March 31, 2024.
- The Ministry of Finance has decided not to extend the temporary reduction in the VAT rate on basic food products after March 31, 2024.
- The Ministry made this decision based on the latest inflation readings and forecasts of the price dynamics of basic food products subject to the transitional 0% VAT rate.
The reduced VAT rate on basic food products is valid from February 1, 2022. It was introduced with the inflation reading for January 2022 at 9.2% (y/y).
According to preliminary data from the Central Statistical Office, inflation in January this year decreased to 3.9% (y/y) and this was the lowest growth rate of consumer prices in this approach since March 2021. The annual growth rate of food and non-alcoholic beverage prices also decreased significantly – to 4.9% in January this year. (i.e. lowest since September 2021).
Downward trend in food price increases
The Ministry estimates that in February and March this year. both inflation (y/y) and the growth rate of food prices (y/y) will remain in a downward trend. The lower growth of food prices will be supported by downward trends in prices on global agricultural markets, as well as the strong base effect resulting from the high increase in food prices a year ago.
Data on total inflation and the dynamics of food and non-alcoholic beverage prices for January and February this year. (after taking into account the new weights) the Central Statistical Office will publish on March 15 this year.
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