El Corte Inglés charged Spanish shoppers 14 euros more for its olive oil than in Portugal

El Corte Inglés charged Spanish shoppers 14 euros more for its olive oil than in Portugal

The same five-litre bottle of extra virgin olive oil, with the identical European barcode, bottled by the same company in Vilches (Jaén) and carrying the same group's brand. In Spain it cost 41.95 euros on El Corte Inglés' online store; in Portugal, 27.89 euros until 13 September. The difference: 14.06 euros with taxes and 12.06 without them. FACUA has brought the matter before the Ministry of Consumer Affairs because, since 1 January, the law prohibits raising profit margins on food items affected by the VAT cut.

The product is identical down to the EAN: 8433329060158. It is bottled by Aceites del Sur-Coosur SA for El Corte Inglés, whose fiscal domicile is in Vilches. On the very Wednesday the case came to light, the company raised the price in Portugal to match the Spanish one before taxes. In Spain, FACUA's monitoring at Hipercor shows a 51.8% price increase between January and September, from 27.63 to 41.95 euros, with a 20.7% jump in the last month alone.

Why does olive oil cost more in Spain than in Portugal?

Portugal has applied a 0% VAT rate since April to a list of basic foods that includes olive oil, a measure extended in principle until the end of October. In Spain, the Government cut the rate from 10% to 5% at the start of 2023. Spain's 41.95 euros drop to 39.95 before taxes; Portugal's 27.89, VAT-free, leaves a 12.06-euro gap. Taxation explains part of it. Not all of it.

Several explanations have been thrown at that gap. One points to shelf rotation: if the product was sold out in Portugal, the price may have gone unupdated for weeks. Another points to the differing weight of consumption: where olive oil is a minority product, demand does not react the same way to headlines about scarcity. And a third, the most uncomfortable one, points to plain and simple retail margin.

The price at origin does not explain the jump on the shelf

This year's harvest will be smaller, but not small enough to justify the surge, argues a producer with some 300 olive trees who makes organic extra virgin olive oil for his own use and is still working through last season's stock. His calculation: the oil was harvested and paid for at origin last year at prices that bear no relation to what appears on the label today. It is the kind of breakdown worth examining line by line before accepting the drought excuse.

At the other extreme, there are those who argue that a high price is preferable to an empty shelf. Better to pay 50 than find the aisle bare. The argument has its logic and its trap: it turns speculation into a public service and passes the bill for an unquestioned commercial management on to the consumer.

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From a full shopping trolley to the parallel street market

The phenomenon has side effects that never make it into the reports. Someone has spotted an individual with a trolley loaded with five-litre bottles outside a metro station, reselling oil on the sly. Fourth-rate speculation, yes, but also a gauge of a self-reinforcing buying panic: the more scarcity is talked about, the more bottles pile up in cupboards, and the more retailers justify the price they set.

The international comparison does not make the figure easier to swallow. In Switzerland, a litre costs around 6.89 francs; in Spain it is close to 10 euros, with very different wages. We are producers and pay like importers. That is the knot no press release unties.

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What may come of FACUA's complaint

The association has referred the matter to the Ministry of Consumer Affairs. The rule it invokes prohibits increasing margins on foods with the reduced VAT rate, and olive oil is on that list. If the inspection concludes that margins were raised, the sanction falls to Consumer Affairs. If it concludes there was only a price adjustment due to costs, the file goes nowhere. As of this writing, no ruling is on record.

Meanwhile, the price on the website remains at 39.99 euros and out of stock, according to the monitoring records circulating. The Portuguese bottle has already been matched to the Spanish one before taxes. The gap, then, has been closed upwards. Which is exactly how things do not get fixed.

The prediction, with all due caveats: if consumption does not slow and the harvest does not recover, olive oil will remain the most expensive thermometer in the shopping basket. And the day it falls, it will fall less than it rose. As always.