The government will not extend the zero VAT rate on food? “Contribution to the inflation impulse”
The government's abandonment of the zero VAT rate on food will contribute to some kind of inflation impulse. However, I absolutely do not expect this ratio to be 1:1 – says Henryk Wnorowski, MPC member, in an interview with Biznes24.
This week, the Monetary Policy Council (MPC) decided to leave interest rates at the current level for the fifth time in a row. The president of the National Bank of Poland (NBP), and chairman of the Council, Adam Glapiński, spoke about the decision of the body during yesterday's press conference. The head of the central bank explained that the lack of interest rate cuts in the face of falling inflation is due to the fact that MPC members suspect that prices will start to rise again in the second half of the year, which will not be the result of monetary policy, but the government's resignation from the zero VAT rate on some food products. .
Will the lack of a zero VAT rate on food increase inflation?
Henryk Wnorowski, a member of the Monetary Policy Council, spoke about a possible increase in inflation due to the increase in the VAT rate on food in an interview with Biznes24. – This will undoubtedly contribute to some inflationary impulse. However, I absolutely do not expect this ratio to be 1:1. I believe that this reaction on the price side will be slightly smaller than the cost impulse in the form of VAT on food and later the abolition of energy subsidies – said Wnorowski.
Let us remind you that the zero VAT rate on food has been in force since February 2022 and has been extended several times, most recently until the end of March this year. This week, the Prime Minister made it clear that the 5% rate would be restored from April. VAT rate. – I wouldn't rule it out, but we still need a moment of reflection by the end of the week, that we will leave the issue of VAT on food at the level that was before this outbreak of inflation and we will observe what happens next – said the head of government.
– My recommendation is this, but the Minister of Finance will still carefully calculate that we could return to 5%. food rates and return to zero at any time if there are reasons – added.
