While prices for some food and other items should have been cheaper with the introduction of the Value Added Tax (VAT), it appears that this has not been the case, according to government, and now they are calling on local businesses to pass on the savings to consumers.
“The Consumer Price Index was updated to reflect the current household expenditure pattern and ensure greater reliability in the provision of information that impacts public policy. On a period to period basis, the rate of inflation in 2010 was about 1% as compared with the 1.9% recorded in 2009. Principally as a result of the pass-through effect of the rising fuel and corresponding utility prices and the introduction of the Value-Added Tax (VAT) in November 2010, the rate of inflation has increased to 8.2%. After the first full year of the new tax regime, prices are expected to stabilize in 2012 and revert to historical averages of 2.5% over the medium term,” said Prime Minister and Minister of Finance, Dr. Denzil L. Douglas.
“We are also aware that prices for some items should become much cheaper to import under the VAT system but these savings are not being shared with consumers. I use this opportunity to call upon those businesses that clearly have the capacity to offer goods and services at a much cheaper rate to explore all avenues to adjust prices downwards to the benefit of their customers,” said Prime Minister Douglas in his Budget presentation on Tuesday.
Dr. Douglas noted that the volatility in international energy prices continues to challenge the policy making process, particularly as it relates to the pivotal issue of price stability.