How will reduced rate of VAT affect price of bread?

Reducing VAT on bread will not lead to a lasting price reduction for the end consumer, smaller bread traders believe. Against this background, some of the country's major supermarket chains are currently selling certain types of bread for 0,20 BGN less.

Even before the reduced rate of VAT on bread came into effect, two of the country's major retailers had already cut prices by 0,20 BGN. This is a social measure, and the impact of lowering prices as early as July 1 is a gesture on the part of large retailers, according to the National Union of Bakers and Confectioners

"The end consumer benefits from this measure, and although economic analysts had spoken out against it, what actually happened is what we claimed - that the price of bread cannot but be reduced by 20%, since we will stop charging VAT on the delivery price of bread," said the chairwoman of the branch union Mariana Kukusheva.

However, this optimistic forecast is not confirmed by retailers across the country:

"This is a drop in the ocean. The price of wheat and flour is high, not to mention fuel prices, I think this is just an eyewash measure," says Mariana Georgieva, a trader.

"They are external companies, so the situation with them may be as if the bread is going for export, without VAT. The State Gazette has not yet promulgated this decision on the VAT for bread," said Lazar Genchev, a trader.

End users do not share the optimism:

Bread won't get cheaper, but there will be no VAT.

It won't get cheaper, but asI don't eat bread, why should I care?

In practice, the zero VAT on certain types of bread should come into force this week with the publication of the budget update in the State Gazette. And then it should become clear whether this will allow bread prices for the end consumer to fall massively.

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