SPECULATIONS ON VAT-CAUSED INFLATION BLOW-OUT UNFOUNDED - GOVT

( Editorial: --> 8881 ) ZAGREB, 2 Feb (Hina) - The data on the movement of retail prices and living costs for January shows that speculations about a possible inflation blow-out caused by the introduction of Value Added Tax are unfounded, the Government Communications Office said in a statement Monday. The statement includes data by the State Statistics Bureau, showing that retail prices in January went up by 2.4 per cent compared to December, while living costs increased by 2.8 per cent. "Since the increase of the same indices in January 1997 amounted to 1 per cent, that is, 1.5 per cent, it is obvious that the introduction of VAT caused only a 1.3 per cent increase of the two indices in January 1998," the statement said. "The Government commends the Commission for Consumer Protection, which has already considerably contributed to the prevention of unjustified price increases. At the same time, the Government continues the implementation of its price-reduction programmes, reminding all producers and traders that the abolishment of turnover tax and the introduction of VAT has helped create conditions for relieving the tax burden, which must reflect in the further fall of prices of most products and services," the Government said in the statement. (hina) jn rm 021703 MET feb 98