Inflation

The inflationary impact immediately following VAT’s introduction was modest (2.7 percentage points on a month/month basis between December 2017 and January 2018). In part, this was due to the impact of exemptions and zero-rated items. In addition, the ongoing deflationary trends in the real estate market also helped to contain inflation said Moody’s.

Among the several consumer basket segments, the lowest passthrough was in housing (where residential sale and leases have been exempted), healthcare, and education (where most basic educational goods and services have been exempted or zero-rated).