Food Prices Fall; Alcohol Prices Rise
Image: YLE / Toni Pitkänen
From October 1, food prices are to decline, with the official implementation of a reduction in the Value Added Tax on food items. Earlier this year Government agreed to chop food-related VAT by five percentage points from 17 percent to 12 percent.
Food retail outlets have pledged that the VAT reduction will be seen at the checkout counter, and estimate that it could mean a 4.3 percent decline in food prices. The Value Added Tax will not change for other shopping list items such as cleaning products and toilet paper.
Although the VAT reduction affects only food items, shoppers will also pay less for ready-made meals cooked up and sold in some supermarkets. On the other hand patrons in cafés and restaurants will continue to pay the 22 percent VAT stipulated for those food offerings.
The tax cut has created a great deal of work for many retail outlets, who have had to change the pricing on stock on the shelves. In many cases, shop workers worked overnight between September 30 and October 1 to effect the changes.
The German-based food chain Lidl was ahead of the domestic Finnish chains, having slashed its prices a week ahead of the official change over.
Although the price guns may have missed a few items in some stores, food retailers are assuring the public that the correct prices have been programmed into their cash registers.
Costly Changes
The Finnish Grocery Trade Association has estimated that the massive changes would have cost the food retail industry between 5 and 10 million euros. The S-Group alone says it has expended some 35,000 man hours of work to effect the transition.
The food chains face another massive task next summer, when the Value Added Tax will rise again by one percentage point.
On the flip side of the coin, the prices of alcoholic beverages are set to rise, pushed up by an increase in excise duties. The 10 percent tax hike will force an average increase of about 4.5 percent in booze prices.
YLE