Prices for all categories for which the government has decided to lower VAT will certainly fall. Retailers will not increase their margin because nobody can afford to be more expensive than their competition, and when margins remain stable, prices will decrease by the difference in VAT, the president of the board of the NTL supermarket retail chain, Martin Evačić, said.
The government’s measures announced earlier this week foresee VAT to fall as of 1 April, from 13% to 5%, on fresh meat and fish, eggs, fruit, vegetables, edible oil, lard, and children’s food, and also in agriculture (seedlings, fertilizer, pesticides), while VAT on butter and margarine will decrease from 25% to 5%.
Evačić, who is the president of the Retailers’ Association at the Croatian Employers’ Association (HUP), underscored that the concentration of retailers on the Croatian market is too high and that consumers watch how they spend every kuna. The lower VAT will mean a decrease in budget revenue, however, with the lower prices demand could be greater, which could offset the effect of the lower revenue and ensure the same profit for retailers.
Some retailers have announced the price of flour and bread could go up again in March by an average of 10% so we are yet to see if some of the government’s measures will prevent that increase, Evačić says.
The Konzum supermarket retail chain has announced that it will reduce the prices of more than a thousand items as of Monday, 21 February, including fruit and vegetables, meat and fish, eggs, edible oil and lard, butter and margarine, children’s food, and hygienic pads and tampons.
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