A temporary suspension of value-added tax on basic food products has resulted in lower prices thanks to retailers not taking advantage of the measure to increase profit margins, Portuguese Prime Minister Antonio Costa said. In April, the government suspended VAT collection on 46 basic food items for six months to ease the burden on families from stubbornly high prices. The list includes milk, bread, rice, tomatoes and a group of meat and fish products. Before the Government's move, the VAT rate was six percent. Separate analyzes by the food and economic security agency ASAE and the largest Portuguese consumer protection association DECO Proteste, carried out from mid-April to mid-May, showed a drop in the prices of the basket of these products by 7,6 and 7,9 percent, respectively , said the prime minister.

"In a country where wages and pensions are low, high inflation has inevitably hit people's incomes... but the measure (reducing) VAT to zero percent has resulted in a drop in the prices of basic products," Costa said in parliament. According to him, the measure was agreed with manufacturers and traders "to ensure that the reduction of VAT is reflected by a drop in the prices of basic products and that is exactly what is happening". Inflation in Portugal slowed to 5,7 percent in April from 7,4 percent in March, with signs of a slowdown in food price growth. According to the government forecast, inflation should drop to 5,1 percent this year, from 7,8 percent in 2022. The European Commission forecasts that it will reach 5,6 percent, Hina informs.