“Against all predictions, inflation in September once implemented the VAT rise reached 3.5 percent,” analysts at Analistas Financieros Internacionales in Madrid pointed out in an investor note. That figure is 0.8 percentage points higher than the one recorded the previous month. So what was it that most businesses said about protecting customers from price excesses?
In many quarters of the retail sector in Spain, the common message was to criticise the government cabinet when back in July it approved a VAT increase from 18 percent to 21 percent–the reduced VAT rate rose, too, from 8 percent to 10 percent while the super reduced rate remained unchanged at 4 percent.
And then, companies competed in a race about assuring clients that they wouldn't just transfer the costs on to them but the spike would be avoided by raising the price tag only partially and slowly. They lied.
The Spanish national institute for statistics INE acknowledged this week that all main spending activities have become more expensive. Particularly, INE economists suspect the big store chains have failed to fulfil their promises. The government had been warned, though.