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Food prices to rise in Latvia

Prices of food products are expected to grow rapidly, the Institute of Agricultural Resources and Economics has estimated, Inga Gulbe, head of the Institute, told Latvian Radio on July 7.

Gulbe welcomed the initiative of reducing value-added tax (VAT) for fresh food products as a solution.

Fruit and vegetable prices increased significantly in the second quarter of the year, Gulbe said. Oil and sugar prices, fuel and transport prices have risen greatly globally. The increase in electricity and gas prices has also been announced in Latvia.

Food prices will also increase significantly, even with double-digit figures, Gulbe forecast, but the rise will be gradual.

She pointed out that it would be felt most by low-income residents. “Some people with high incomes and who spend a relatively small portion of their income on food, they will not even notice [price increases]. But for some it could be quite unpleasant,” Gulbe said.

Gulbe supported the initiative to reduce the VAT rate to 5% for fresh foods. This would be important both for the industry from a business point of view and for the population. “It is the poorest part of the population that spends a higher share of the income on food. For them it would be a relief, especially now that price increases are predicted.”

 

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