Sweden to cut food VAT in 2026 budget
Tax on food purchases reduced from 12% to 6%
SWEDEN – Sweden will reduce value-added tax on food from 12% to 6% starting next year as part of its new budget measures.
The Ministry of Finance announced that the temporary reduction will take effect on 1 April 2026 and remain in place until the end of 2027.
According to the ministry, the measure is intended to ease household expenses as food prices continue to reflect the effects of inflation and other cost pressures.
Government presentation material indicated that a household with two children could save about US$686.60 over the course of the scheme.
The ministry pointed to earlier high inflation, limited competition in retail and environmental factors such as drought and energy costs as the main drivers of food price increases.
To ensure the tax cut leads to lower prices, the government plans to establish a food price commission made up of the Swedish Consumer Agency and other authorities.
This body will track price developments in supermarkets and report on whether consumers benefit from the reduction.
In addition, the Swedish Agency for Economic and Regional Growth has been tasked with identifying steps to simplify operations in the grocery sector.
The government is also asking the competition authority to advise municipalities on how to encourage the opening of more food stores.
Deputy Prime Minister Ebba Busch wrote on X that the reform will provide the greatest relief to households that have struggled the most with high costs.
Economic data shows that Sweden’s inflation rate in July reached 3% when measured by the Consumer Price Index with a Fixed interest rate (CPIF), compared to 2.8% the previous month.
The increase was 0.8% in July under the broader Consumer Price Index (CPI) measure, and Statistics Sweden’s estimate suggested 3.3% CPIF inflation for August.
Inflation in Sweden peaked at the end of 2022, when CPI reached 12.3% and CPIF was at 10.2%.
Industry response
The Swedish Food Federation (Livsmedelsföretagen) welcomed the move, saying it strengthens household purchasing power at a time when local food production is declining.
It noted that reducing VAT lowers the price difference between domestic products and cheaper imports.
However, the group warned that while the change would reduce grocery prices for households, it would not offset the continued rise in production costs for food producers.
The federation added that prices are still expected to increase in the future, though starting from a lower base.
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