Gastronomy: Price expectations go "through the roof"
Turnover in the hospitality industry is currently weakening. In the catering sector, the figures are even dramatic compared to pre-corona times. From January 1, the old VAT rate of 19% will also apply. According to an IFO survey, higher prices are to be expected.
Even before the return to the higher VAT rate on food, the German hospitality industry was already generating less turnover. According to the Federal Statistical Office, revenue fell by 2.1 percent in October compared to the previous month. Adjusted for inflation, the drop was even greater at 2.5 percent.
The mood in the catering industry is currently in the doldrums, as the reduced VAT on food due to the coronavirus crisis and rising energy prices as a result of the Russian invasion of Ukraine will expire in January. The rate will then return to 19 percent instead of 7 percent. Restaurateurs fear that guests will then stay away. "Their business expectations have plummeted," said IFO expert Klaus Wohlrabe about his institute's December survey of companies. "At the same time, price expectations are going through the roof." Prices are therefore likely to rise in the food service industry.
Inflation-adjusted turnover in the food service industry fell by 2.3 percent in October compared to the previous month. This was 14.7% lower than in October 2019, the same month before the outbreak of the coronavirus pandemic in Germany. The situation is similar for hotels and other accommodation providers. They generated 2.3% less turnover than in September. At the same time, turnover was 7.5% below the pre-crisis level of October 2019.
The industry association DEHOGA has criticized the planned return to the old VAT rate. This would jeopardize thousands of livelihoods. Many economists, on the other hand, welcome the agreement between the governing parties to return VAT on food in restaurants and cafés from seven to 19 percent. "This very expensive concession is socially problematic because it particularly benefits the wealthy," said Friedrich Heinemann from the Center for European Economic Research.
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Despite the ongoing challenges in the hospitality industry, restaurant operators anticipate higher prices due to the IFO Institute's survey findings. The return of the 19% VAT rate on food from January could potentially further increase these prices, potentially deterring guests.
Source: www.ntv.de
