Consumer prices: Scholz for lower VAT rates on food

In order to ease the burden on private households, Chancellor Olaf Scholz (SPD) is in favor of reducing the reduced VAT rate for food from 7 to 5 percent. “That would help a lot of people who earn little money, and it wouldn’t be an excessive burden on the federal budget,” said Scholz on the ARD “Tagesthemen”.

“I think it’s important now that we do something very manageable that everyone notices every day when it comes to their daily needs,” said Scholz. Although inflation has fallen, it is still higher for those who shop every day and have to do precise calculations. “I think we have a good opportunity to do something about that.” The reduced VAT rate of 7 percent applies to staple foods.

Consequences of the Ukraine war for the economy

The reasons for the high rate of inflation in recent years are understandable, said the Chancellor. We need to talk about what Germany has experienced in recent years: “A major war in our neighborhood, terrible consequences for our economy when suddenly half of the gas was missing,” said Scholz. “We’ve overcome all of that, but we’re still chewing on it.”

In November, consumer prices in Germany were 2.2 percent higher than in the same month last year. In October, the annual rate had already risen to 2.0 percent after two months of falling values.

No expert is currently expecting a wave of inflation like that in 2022, when energy and food prices skyrocketed as a result of the Russian attack on Ukraine and the inflation rate in Germany climbed to almost nine percent. High inflation rates reduce the purchasing power of consumers.