Swedish Government Plans Temporary Food VAT Cut to 6% to Ease Inflation Impact

Sweden plans to halve its value-added tax (VAT) on food from 12% to 6% starting April 2026 through December 2027 to ease inflation pressures on households, particularly benefiting low-income families. The government expects this measure to reduce grocery costs significantly, with estimates suggesting a family with two children could save about Skr6,500. This temporary VAT cut is part of a broader 2026 budget package, which includes approximately 80 billion crowns of unfinanced economic measures aimed at stimulating growth ahead of an election year. Economists agree that the VAT reduction should lead to lower food prices if competition in the grocery sector is ensured, with calls for policies promoting more grocery stores and price competition. While some argue that targeted grants might be more cost-effective in aiding low-income households, tax cuts are viewed as a better path for long-term economic growth. The government will monitor the impact through a food price commission and work to simplify grocery sector regulations to promote competition and reduce costs further.