Olive Oil Prices Drop Ahead of VAT Abolition: Will Prices Stay Low or Revert to Normalcy?
In June, supermarkets reduced the prices of olive oil just before the abolition of VAT on this product, which will be in effect between July 1st and September 30th. The liter bottle of white label extra virgin olive oil in major supermarkets like Mercadona, Carrefour, Dia, and Alcampo dropped to six-month lows. While it is too early to tell if this reduction in price will be permanent, the main distributors have announced an additional reduction of around 50 cents per liter starting today.
Despite the temporary price reductions, Primitivo Fernández, the general manager of the National Association of Oil Bottlers and Refiners (Anierac), points out that prices at origin are not showing significant movements that would indicate a change in trend. However, the abolition of VAT on olive oil has been welcomed by industry experts and consumers alike, as it promotes the consumption of this basic product of the Mediterranean diet.
The distributor brand EVOO bottle was priced at 9.65 euros in major supermarkets in June, compared to the 9.90 euros it had been priced at since the end of January. This price drop is mainly attributed to falling wholesale prices due to a better-than-expected harvest. Overall, the basic shopping basket cost decreased by 1.11% in June, with Carrefour applying the most significant discounts.
The gradual recovery of normal prices is expected as the VAT reduction measure is extended and the market adjusts accordingly. Overall, while prices may fluctuate due to seasonal factors such as weather conditions and crop yields, they are expected to remain relatively stable over time as long as supply and demand continue to balance out.
In conclusion, while there may be short-term fluctuations in olive oil prices due to various factors such as weather conditions and crop yields, long-term trends suggest that prices are likely to remain relatively stable over time as long as supply and demand continue to balance out.
