Tashkent, Uzbekistan (UzDaily.com) -- The analysis was conducted on the basis of studying the state of prices in national supermarkets, as they are VAT payers and conduct official activities. 

In particular, statistical data for four months on 97 groups and 3754 kinds of consumer goods were collected by data-scraping method. The change in prices in December-January for each type of product (treatment group) was compared with the change in prices in November-December and January-February (control group).

The results show that the reduction of VAT from 15% to 12% did not lead to a corresponding decrease in the prices of consumer goods. In particular, the change in prices in December-January was 0.3% higher than the change in prices in November-December and January-February. This means that prices, which should have fallen by 2.6% (1.12/1.15*100%-100%), on the contrary rose by 0.3%, excluding the influence of all other factors.

In particular, prices of 1,115 products in 46 groups (baby food, ice cream, pasta, body care products, etc.) remained unchanged. Prices of 1306 products in 20 groups (chocolate, sweets, hygiene products, etc.) increased by 1%. Prices of 585 products in 12 groups (detergents, fruit, meat products, milk, etc.) increased by 1-5%. Prices have decreased (up to 1.6%) for 567 products in 7 groups (stationery, sauces, coffee, etc.).

Previously, the PMI experts, using a model toolkit "input-output" determined that the VAT rate reduction by 3 p.p. for 78 sectors of the economy would reduce costs and, consequently, reduce prices in the real sector of the economy by 0.8 p.p. In practice, however, entrepreneurs have not yet decided to pass on the tax relief to the consumer.

Among the main reasons why the reduction of VAT did not affect the price level are the following:

- a large share of the shadow economy in the market of consumer goods, hence the reflection of the effect of tax cuts on the increase in the rate of relatively small profits of officially operating firms;

- insufficient formation of the relevant competitive conditions on the markets;

- increasing influence of other main factors on prices (dollar exchange rate, refinancing rate, money supply, etc.).