OVIEDO, Spain 

Spain announced on Tuesday that it will eliminate sales tax on olive oil, a key product of Spanish cuisine, after a massive price spike in recent years.

The price of a liter of no-name extra virgin olive oil in a supermarket, from €3.45 ($3.70) in February 2021, has now risen to €9.46, according to data from Spanish broadcaster RTVE.

The elimination of sales tax, which was at 5%, will reduce the price by around €0.50 per liter.

According to National Statistics Institute, olive oil, spiking by 63%, has experienced the single largest price increase of all products tracked over the last year.

Years of crippling drought in many olive oil-producing regions of Spain, alongside price spikes in energy and other components related to production, have all contributed to the dizzying price increase.

Spain is one of the top producers of olive oil in the world. During the last season, production fell 34% from the four-year average, according to forecasts from the Agriculture Ministry.

Yet, after a rainy spring, experts suggest olive oil production in Spain will recover to normal levels for the upcoming season.

Under the new government measure, olive oil will be permanently classified as a basic food staple, alongside bread, eggs, milk and produce.

The elimination of the sales tax will begin on July 1 and last until October.

In late 2022, the Spanish government cut sales tax on all basic foodstuffs from 4% to 0% to alleviate inflation. That measure has been extended until October, the government announced on Tuesday.

But from Oct. 1, sales tax on all staple food products, including olive oil, will be brought back gradually, starting with 2%.