Danish Food Prices May Fall as PM Backs VAT Cut

Danish consumers could soon see cheaper groceries in local supermarkets. Prime Minister Mette Frederiksen says planned food VAT cuts will reach shoppers directly. She dismissed concerns that retailers might keep the savings as profit. Major supermarket chains have promised to lower their store prices accordingly.

Frederiksen spoke at a press conference in Odense before a party meeting. Executives from Salling Group attended the meeting with politicians. Salling Group owns major Danish supermarket chains like Føtex, Bilka, and Netto. The company confirmed it will not expand profit margins during the tax cut. It expects store prices to drop one-to-one with the VAT reduction.

Frederiksen hopes food producers and farmers will also pass on the savings. She warned suppliers not to skim off extra profit for themselves. The proposal aims to cut food VAT in half. This change will cost the Danish state 17.4 billion kroner each year.

However, several leading economists have criticized the expensive proposal. Critics argue that lowering VAT is an ineffective way to help consumers. They warn that supermarkets or producers might still absorb the extra money. Administrative expenses could also rise under the new plan. This report is based on coverage by The Local Denmark.