Swedish food prices drop ahead of VAT cut

Swedish food prices decreased in March 2026, with grocery chains lowering prices ahead of a VAT reduction on food that took effect on April 1, according to Ulf Mazur, CEO of Matpriskollen. Matpriskollen reported that food prices fell by 3.1% year-on-year in March 2026. In contrast, Statistics Sweden (SCB) reported that food and non-alcoholic beverage prices fell by 1.0% in March compared to February and were unchanged year-on-year. According to multiple reports, the difference between the two figures is due to different measurement periods: Matpriskollen measures on the last day of the month, while SCB measures around the 15th.

Specific product categories saw notable declines. Matpriskollen reported that the price of cheese fell by 6.5% in March 2026, while the price of sausages, ice cream, and snacks fell by 4%. Among retailers, Lidl, Willys, and Coop lowered their prices by 5.36% in March, according to Matpriskollen. Coop has lowered prices the most among Swedish grocery chains during the year, Matpriskollen said. Stora Coop implemented its own price adjustments on 3,000-4,000 items earlier in the year for competitive reasons, according to multiple reports. However, Hemköp changed its prices on April 1, 2026, not before, making it appear in statistics as if they did not lower prices in March, according to Dagens Nyheter, citing Ulf Mazur. Some chains display prices with öre to make price cuts visible, while others round to the nearest 5 or 10 öre, Mazur told Dagens Nyheter.

The VAT reduction applies from April 1, 2026 to December 31, 2027, according to research. The Swedish government stated that the reduction is intended to help households manage inflation and rising living costs. The reduced rate applies to food in stores and takeaway food, but not to restaurant meals, creating boundary issues. Takeaway food qualifies for the 6% VAT rate, while dine-in restaurant services remain at 12%, according to research. Bottled water is included in the reduced rate; alcoholic beverages are excluded, research shows. The VAT reduction affects businesses selling or supplying food in Sweden, including supermarkets, retailers, wholesalers, food producers, and hospitality businesses, according to research. Foreign suppliers selling food into Sweden must apply the correct temporary rate, research indicates. Businesses must update pricing, invoicing, and VAT reporting systems to comply with the new rate, according to research. Restaurants will have different prices depending on where customers eat (takeaway vs. dine-in) due to the VAT rules, multiple reports noted.

Consumer and retailer reactions in Sweden have been mixed. According to Kuriren, customer Elinah Lindblom described being happy to see that prices had dropped by about 5% after the VAT cut. According to Uppsala Nya Tidning, Amanda Järpemo, vice CEO of ICA Maxi Gnista, described working intensively during the Easter period to adjust prices on thousands of items ahead of the VAT cut. A price comparison of 15 common items in Ängelholm in mid-March, conducted by Helsingborgs Dagblad, showed that ICA Supermarket on Vattengatan was most expensive at 715.75 kronor. After the VAT cut, a basket of 15 items became cheaper in all stores, with reductions ranging from 1.2% to 12.5%, according to Helsingborgs Dagblad. According to Dagens Nyheter, an anonymous producer described being urged by large grocery chains to freeze prices so that the VAT cut is clearly visible to consumers.

In the UK, Morrisons announced price cuts on a wide range of products, including its Savers range, from April 2026, the company said. Morrisons' price cuts include Fyffes Loose Bananas (90p), Morrisons Baby Potatoes 1kg (£1.09), and other items, according to the company. Morrisons also introduced spring offers on thousands of branded items, such as Birds Eye Fish Fingers (20pk - £3.00), the company said. Alex Paver, Pricing and Customer Director at Morrisons, stated that the price cuts are to help customers manage household budgets.

The VAT reduction in Sweden may have cross-border implications. Denmark maintains a flat 25% VAT on all goods, including food, according to research. Danish retailers have expressed concern that the VAT gap between Sweden and Denmark may increase cross-border shopping from Denmark to Sweden. The VAT reduction is projected to cost the Swedish state significantly, according to research, though the exact amount has not been disclosed. It remains unclear how much of the price reductions are directly attributable to the VAT cut versus competitive pricing or other factors, and whether the reduction will lead to sustained lower prices for consumers or be absorbed into retailer margins.