Inflation in Spain: Minister wants fixed price for food - policy

Spanish Labor Minister Yolanda Díaz has met with opposition when she calls for caps on the prices of basic commodities. After a first round of exploratory talks, the industry has spoken out against their proposal to introduce a fixed-price shopping basket with groceries. The distribution associations, which represent supermarkets such as Mercadona, Alcampo or Lidl, believe that the proposal is not suitable to solve the problem of rising prices. A meeting between Díaz (Unidas Podemos), Spanish Consumer Protection Minister Alberto Garzón (Izquierda Unida) and the retailers ended on Monday without an agreement.

To the consequences of inflation To cushion this, Díaz had declared last week that he wanted to freeze prices until Christmas. The shopping basket she proposes should contain fresh produce, including meat, fish, vegetables, eggs and dairy products, and guarantee a healthy diet. In response to the minister's proposal, the French supermarket chain Carrefour had already announced that it would sell a package of 30 basic foods for 30 euros for its Spanish branches.

Díaz's proposal has also caused unrest within the Spanish government for days: Minister of Agriculture Luis Planas (PSOE) emphasized that such decisions always have to go through his ministry and that he does not intend to act in this direction. In addition, the Spanish antitrust authority (CNMC) warned that any agreement between supermarket operators, maximum prices for certain Food set, was prohibited by law. When asked about this, Díaz assured her that her proposal was perfectly legal and that the trade law allows exceptions in this regard.

Retailers would rather have a VAT reduction

At their meeting with Díaz, however, the sales associations described such an agreement as "unworkable and counterproductive". Instead, they have proposed other measures that they believe to be more efficient, including a temporary reduction in VAT: "It would be possible to examine which products will have their VAT reduced from 21 to 10 percent and which products will have their VAT reduced from 10 to 4 percent could," says Ignacio García Magarzo from the Spanish Association of Distributors, Self-Service Shops and Supermarkets (Asedas). It should also be considered whether staple foods could be completely exempt from VAT.

Inflation in Spain is at its highest level in almost four decades. In August, consumer prices rose by 10.5 percent compared to the same month last year, as the statistics office INE announced on Tuesday. "In this case, it's the big distributors, like the big energy companies or the big banks, that get the highest profit margins," said Labor Minister Díaz.

Despite the concerns from the industry, she does not want to say goodbye to her idea just yet. After the exploratory round, which lasted just over an hour, she stressed that the supermarkets were perfectly capable of realizing the proposed shopping basket: "We can ask for effort from those who have the most," she appealed to the Spanish distribution associations. She invited the participants to meet again in the coming days.

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