Poland brought back the VAT tax on basic foodstuffs on Monday, after more than two years of a zero rate that was aimed to reduce the impact of high inflation on households' budgets.
Inflation in Poland and elsewhere in the world went up in the wake of the coronavirus pandemic due to supply chain bottlenecks when lockdowns ended and customers rushed to purchase goods and services after a period of Covid-19 restrictions. The situation was further exacerbated by Russia's invasion of Ukraine in February 2022.
In reaction to high inflation, which at one moment reached 18.4% in annual terms, the Polish government cut the 5% VAT tax on basic foodstuffs to zero from February 2022.
But with inflation easing to 2.8% year on year in February 2024, the reason for keeping the rate at zero disappeared.
The reinstated 5% rate will affect such basic foods as meat, fish, bread, milk and dairy products, eggs, fruit and vegetables.
According to the National Bank of Poland, the country's central bank, the reinstated VAT on food may raise annual inflation readings by 0.9 percentage points.
In reaction to high inflation, which at one moment reached 18.4% in annual terms, the Polish government cut the 5% VAT tax on basic foodstuffs to zero from February 2022.
But with inflation easing to 2.8% year on year in February 2024, the reason for keeping the rate at zero disappeared.
The reinstated 5% rate will affect such basic foods as meat, fish, bread, milk and dairy products, eggs, fruit and vegetables.
According to the National Bank of Poland, the country's central bank, the reinstated VAT on food may raise annual inflation readings by 0.9 percentage points.
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