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Analysts: Unstable Demand on Market Won't Allow Raise in Prices
Monday 30 August 2010 Zoom in | Print page
Bratislava, August 30 (TASR) - It's not likely that the widely-expected rise in value-added tax (VAT) will force consumer prices go up, according to analysts interviewed by TASR on Monday.
"Currently, consumers are exceptionally hesitant and sensitive about prices. If the prices go up due to a small rise in VAT, then consumers may prefer to shop around," Volksbank Slovakia main analyst Vladimir Vano told TASR.
Therefore, by raising prices the vendors – particularly smaller stores – will run the risk of losing their clients to the competition, as the environment now contains a sufficent number of competitors. "In order to maintain their market share and number of clients, the smaller retailers won't have much latitude for raising prices, even if it means seeing smaller profits for them," he said.
His opinion is shared by Postova Banka analyst Eva Sadovska. "Raising the VAT tax to 20 or 21 percent shouldn't translate into significant hikes at shops, as the economic behaviour of Slovaks can have an impact on demand," she said. She added that she also doesn't expect the raise of VAT to have any effect on the so-called shopping tourism of Slovaks to neighbouring countries.
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