Swedish Government Commits to Halving Food VAT Amid Public Skepticism

The Swedish government, led by Energy and Business Minister Ebba Busch (KD), has reaffirmed its plan to cut the VAT on food from 12% to 6%, starting April 1, 2026. This policy aims to ease the cost of living for Swedish households by reducing grocery bills, with the Finance Department estimating the cost to the state at around 37 billion kronor. The VAT reduction is set to remain in effect until December 31, 2027.

Despite the government's commitment, public confidence in the measure is low. A recent Nordea survey cited by Marcus Oscarsson's economic report found that 71% of households do not anticipate a decrease in food prices this year, and over 15% even expect price increases. Many suspect that major food retailers will absorb the VAT cut benefits without passing savings to consumers. This suspicion is reflected in a decline in consumer willingness to prioritize food purchases, dropping from 17% in 2025 to 10% for 2026.

Financial concerns are especially acute among pensioners; 40% of them foresee a tighter budget in the coming year.

In response to these doubts, the government has pledged to enforce strict price monitoring to prevent inflationary responses by food retailers exploiting the VAT cut. Anders Stenkrona, a private economist at Nordea, highlighted the prevalent belief that the potential price advantages might be diluted by retailer pricing strategies.

This policy is part of a broader government initiative to make life more affordable for Swedes by tackling food costs directly. The upcoming months will be critical to assess whether the VAT reduction translates into tangible relief for consumers or falls short of public expectations.