Italy is facing rising food prices alongside a long-stalled IVA (VAT) reform, that has been waited for decades. Parliament is actively proposing changes to reduce IVA on various food and specialty products.
This year, many of the thousands amendments to 2026 budget law have been targeted IVA rates. Food products are the main focus.
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Which products will be included in the IVA cut?
Proposals include cutting IVA on fresh or processed pork from 10% to 4%, an adjustment estimated to cost the state around €900 million. Oysters are also being reconsidered for a 10% reduced IVA.
There are also proposals to eliminate IVA entirely on basic necessities that currently enjoy a 4% rate. This includes bread, pasta, dairy products, eggs, fresh and dried fruit, vegetables, legumes, cereals, and oils. The estimated cost of such a reform is €1.5 billion.
Additional measures under discussion include reduced IVA on certified organic foods (€1.35 billion), over-the-counter medicines, refurbished furniture (€40 million), and vehicles used by social organizations.
How have food prices increased over the last five years?
Food prices have surged significantly in recent years. Basic staples such as bread have increased 62%, pasta 38%, and milk 20%. Oils and seed products have risen up to 68%. Overall, grocery costs have risen 31% over the last decade.
Unprocessed foods rose 4.2% year-on-year, while processed foods increased 3%. These price hikes have outpaced general inflation by about eight percentage points, placing a growing burden on households.
Impact on People
Rising costs are forcing families to adjust their spending. Many people are reducing the quantity or quality of food purchases. Essentials like bread, pasta, and milk now take up a larger share of household budgets, particularly affecting low- and middle-income families.
Regional disparities also play a role, with northern people often facing higher prices than those in the south. The pressure on purchasing power is particularly pronounced in cities, where daily costs are already higher.
IVA reform is a challange
The IVA proposals reflect tension between supporting households and maintaining public finances. Reducing or eliminating IVA on essentials could ease consumer costs, but the reforms come with high price tags. Energy price shocks, supply chain disruptions, and rising labor costs continue to push food prices higher, limiting the effect of any tax changes.
Policymakers are under pressure to balance social relief with fiscal responsibility. While IVA reductions could help, they risk favoring some industries and could strain public budgets if not carefully implemented.
