An agreement was signed on Friday at the Ministry of Economics (EM) with food retailers and retail sector representatives to ensure the full transfer of the value-added tax (VAT) reduction from 21% to 12% to consumer prices for certain essential food products starting from the 1st of July this year.
During the event, the parties signed an agreement titled “On the Fair Transfer of the VAT Rate Reduction.” The agreement aims to ensure that the VAT reduction from 21% to 12% for bread, fresh milk, fresh chilled poultry meat, and fresh poultry eggs is fully reflected in final retail prices in stores.
An amendment to the memorandum on food retail trade was also signed.
The updated memorandum aims to improve access to essential food products for Latvian residents by expanding the range of products included in the low-price basket, improving product visibility and recognition, and encouraging consumers to consciously choose products made by Latvian producers.
The signatories agreed to expand the low-price product basket by adding more products
to the existing ten product categories. They also plan to evaluate the possibility of implementing a national campaign to promote local products.
During the event, Economics Minister Viktors Valainis stated that within a year since the memorandum on reducing food prices had been signed, a low-price basket had been introduced and several monitoring tools developed, including a price comparison tool that had not previously existed.
He noted that while product prices in Latvia and across the Baltic states had increased over the past year, food prices had decreased only in Latvia as a result of these measures.
As previously reported, the memorandum on reducing food prices was signed in May 2025. It was signed by the Minister of Economics, the Latvian Food Traders Association, the Latvian Chamber of Commerce and Industry, the Latvian Central Union of Dairy Farmers, the Latvian Food Industry Federation, the Cooperation Council of Agricultural Organizations, the association Zemnieku saeima, and other partners.
The memorandum provided for the introduction of a low-price food basket,
the implementation of a price comparison tool, and measures to increase the share of locally sourced products in stores.
Under the memorandum, the low-price basket must include at least one product from each of ten basic food categories. These categories include bread, milk, cheese, cottage cheese, butter, sour cream, yogurt, buttermilk, fresh vegetables and fruits, pork, poultry, beef and veal, sheep and goat meat, fresh fish, eggs, flour and other grains, as well as vegetable oils.
At the same time, Latvia’s Consumer Rights Protection Centre, while monitoring implementation of the memorandum and the contents of the low-price basket, concluded in February this year that Latvian low-price food baskets often lacked part of the product categories specified in the agreement.
It has also been reported that from the 1st of July this year, a reduced VAT rate of 12% will apply to certain essential food products, including flour, milk, poultry products, and fresh eggs.
The amendments were adopted in order to reduce the impact of rising food prices on residents’ welfare. The changes to VAT regulations are linked to Latvia’s 2026 state budget and the budget framework law for the following three years.
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