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Trade: No significant rise in the foodstuff prices after the cut of VAT
The monthly analysis of the data made available by the major retailers does not point to a significant rise in the foodstuff prices after the authorities announced measures to cut the value-added tax (VAT), shows an annual report of the Competition Council on key sectors.
The price of the 36-foods basket failed to record significant fluctuations, as it went up 0.24 percent on average in this April from March, the document says.
Once the slashed VAT was implemented in early June, the average monthly price of the basket dropped 11.9 percent from 308.5 lei down to 271.9 lei. The situation amounts to a nearly full conveyance of the VAT cut from the retailers further to the end-consumers (slashing the VAT from 24 percent to 9 percent would translate into 12.1 percent price cut).
The most important price fluctuations were seen in fruit and vegetables, with the dairy products coming next, most likely being the result of the seasonal effects.
As for traditional trade, the processed data shows the average sale prices dropped in the early days after the VAT cut. Nevertheless, their impact on prices is only partial, since the decrease in the overall cost of the goods basket was of some 9.1 percent as compared to a possible maximum of 12.1 percent.
The price drops in modern trade were more pronounced than in traditional trade, with the VAT cut being nearly totally conveyed to the consumers.
Trade in foodstuffs is a sector of high importance in the Romanian economy, given that last year 19.7 percent on average of the total income of the households was assigned to purchasing foodstuffs.