So how much is the VAT increase in this weeks budget going to effect binocular prices?
Might need to dash out for a pair of Swarovisions before they are priced out of my reach!!! ;o)
Matt
Economists will argue endlessly over the impact that VAT rate changes have on prices. Germany inceased its VAT rate from 16% to 19% a couple of years ago and there was little, if any, impact on inflation. Similarly when the French reduced the VAT rate on restaurant meals there was, surprise surprise, little impact on restaurant prices. However, it's clear that businesses will have to deal with the increase in the rate but it would be wrong to say that everything will go up by the 2.5 points in the headline rate. Prices are dictated by a number of factors other than VAT (e.g. a survey a few years ago showed that childrens' clothing in the UK is the most expensive in Europe; yet it's the only country in the EU - except for Ireland - with a zero rate of VAT on childrens' clothing!). For imports the exchange rate is also important so you might want to watch how the pound is doing against the euro.
What you can expect next Christmas is a tidal wave of "beat the VAT increase" special offers. Which is probably one of the reasons for delaying the increase (to boost economic activity in the last couple of months of the year). Equally, expect a number of "we'll pay your VAT increase" offers in January.
So you pays your money and takes your choice (or not). Personally, I'd be tempted to look around now whilst demand may not be too high and before the wave of special offers increases demand - but turns out be the usual mirage as far as "bargains" are concerned.
Best of luck,
DiP
Before you get to the VAT increase there is a price increase for Swarovski due to be implemented in July, then of course the VAT increase in January 2011