Swedish Government Moves to Curb Hidden Food Price Hikes Ahead of VAT Cut

The Swedish government, working with the Sweden Democrats, has unveiled a plan to temporarily reduce the value-added tax (VAT) on food from 12% to 6%, effective from April to December 2026. This election year budget initiative is expected to cost approximately 16 billion kronor. To ensure the VAT reduction benefits consumers without leading to covert price increases, the government has established a food price commission tasked with closely monitoring food prices.

The commission is led by the Consumer Agency (Konsumentverket) and the National Institute of Economic Research (Konjunkturinstitutet), with involvement from the Competition Authority and Statistics Sweden (SCB). Starting immediately, it will monitor food prices daily and engage with key stakeholders, including food companies and the Swedish Board of Agriculture. The commission aims to prevent retailers and grocery giants from exploiting the VAT cut by raising prices before April 1, 2026.

Finance Minister Elisabeth Svantesson emphasized that the commission's work will impose increased scrutiny on retailers and grocery chains to deter any unjustified price hikes. She also highlighted that an initial report from the commission will be submitted by March 1, 2026, before the VAT change takes effect. The commission's oversight will continue as long as needed, with a final report expected by 2028. The government has allocated 5 million kronor annually in 2024 and 2027 to support the Consumer Agency’s monitoring efforts.

This comprehensive approach reflects the government's commitment to protecting consumers amid rising living costs by ensuring that the tax relief translates into lower food prices rather than being absorbed through silent price increases. The initiative comes as part of broader budget plans aimed at easing economic pressure on households in the run-up to the 2026 parliamentary elections.