Inflation and VAT: Are there a risk of higher prices in the hospitality industry?

Inflation and VAT: Are there a risk of higher prices in the hospitality industry?

The situation in the catering industry is already difficult due to the corona pandemic and high inflation. Many restaurants and pubs are urgently looking for staff at the same time as energy and purchasing prices are rising. However, the situation could worsen further as the VAT cut on food expires in December. From January, the tax rate could rise again to 19 percent, which would lead to higher prices for restaurant meals. The catering industry fears that restaurants will die out, as many businesses are at risk of going out of business if there is a tax increase. In addition to the VAT increase, the industry is also struggling with a staff shortage. Many restaurants have already switched to self-service or charge flat service fees and cover charges. Some also rely on menu prices to ensure that kitchen staff can serve food on time.

This development could have a significant impact on the market and the financial industry. The catering industry is an important sector of the economy and a large employer. A possible death of restaurants would have negative consequences for the employment situation and the economy. Higher food prices could also lead to a reduction in demand as many consumers can no longer afford to eat out. The increased costs could also lead to a further exacerbation of staff shortages, as many companies may not have the financial resources to hire or adequately reward staff.

It remains to be seen how the situation will develop. The decision on the VAT increase rests with the government, and the catering industry is hoping for an extension of the lower tax rates. It is important to closely monitor the impact on the market and the financial industry and take possible measures to support the industry and mitigate negative consequences.

Source: According to a report by www.watson.de