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Price Freeze
Supermarkets reject proposal to freeze prices of basic goods
The principal supermarket chains in Spain have rebuffed a government proposal to freeze prices of basic staple items temporarily to ease the inflation burden, urging the government to instead reduce taxes.
The proposal sought to reach an agreement with retailers to offer products including meat, fish and eggs at a fixed price until January. However, the initiative has also faced criticism from other business groups and politicians who see it as price regulation.
Spain's Labour Minister, Yolanda Diaz and Consumer Minister, Alberto Garzon held talks with the sector on Monday to review the proposal, which they described as "legal and based on the competition principle."
Yet retailers stated they were already offering several discounts and making "an extraordinary effort" to not pass on escalating costs to consumers as much as they could.
The three associations in the meeting represented most of the sector, including Carrefour, El Corte Inglés and Mercadona, Spain's leading supermarket chain, holding a 25% share, Reuters reports.
"If you try to set a fixed shopping cart price, you are trying to distort the relations between the retail companies themselves and the suppliers," head of the National Association of Large Distribution Companies (ANGED), Javier Millan-Astray said after the meeting.
"It's inevitable that there will be an increase, but you can't kill the messenger," he added.
Annual inflation in Spain reached 10.3% last month and concerns over the cost of living are mounting. Recent findings by the AECAC association of manufacturers and distributors revealed 65% of consumers are now more focused on price than other factors, and 63% seek out discounts.
As such, the sector has urged the government to reduce VAT on certain products.
"We have asked minister Garzon to say today which food products have to be taxed at 21%, and which should be taxed at 10% or at 4%," said Ignacio Garcia-Magarzo, head of supermarket association ASEDAS.
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