Illustrative image. (source: Jozef Jakubčo)
Butter and eggs have caused a stir in Slovakia; the reason is their increasing price and, in the case of the latter, their unavailability. Compared to the neighbouring countries, both are more expensive in Slovakia.
Currently, a 250-gram butter block costs €2.89 in Slovak Tesco stores; in Czechia €2.56, in Hungary €2.07, in Poland around €2.30, and €2.79 in the Hofer chain in Austria.
When it comes to the latter, the price of a pack of ten M-sized cage eggs starts at €2.79 euros. In Hungary it's around €2, in Czechia €2.32. With the price of €3.29, eggs are more expensive in Austria, but these are cage-free.
What makes Slovakia so special that consumers pay more for food than their neighbours and that these items have become a political issue? At first glance, there is absolutely no reason for this.
Little influence of VAT
The first reason for the difference in prices is the different VAT applied to eggs. In Slovakia, they are subject to a 20-percent VAT. From January 1 next year, it will be 19 percent.
For comparison, Austria has a 10-percent VAT, Germany has 7 percent, Czechia has 12 percent, and both Hungary and Poland have 5 percent.
Using the current Tesco online shop prices of cage eggs in Slovakia, Czechia and Hungary, the prices without VAT are €2.33, €2.07, and €1.86, respectively. This comparison shows that eggs in Czechia are 11 percent cheaper and eggs in Hungary are 20 percent cheaper than in Slovakia.
In the case of butter, the current VAT is 10 percent in Slovakia, 12 percent in the Czech Republic, and 18 percent in Hungary. Without VAT, the price would be €2.62, €2.28, and €1.75, respectively. Hungarians pay a third less for the same butter block in Tesco.
Market prices are key
The final price in stores is the sum of the selling price of the goods without VAT, and is based on both the contract between as producer and a retail chain, as well as the retail mark-up. A chain then adds VAT to the price.
Selling prices are the backbone of the final price. The lower it is, the lower the final price should be.
This logic somehow does not work in Slovakia. In the case of eggs and butter, which are more expensive than in its neighbours, we encounter a paradox when it comes to sales prices.
