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Inflation rate to fall on tax cuts

Hungary's value-added tax cuts taking effect January 1 will shave 1.67 percentage points off next year's inflation rate, daily Népszabadság said, citing government calculations. The decision to reduce the top VAT rate to 20 % from 25 % will affect 54 % of goods and services, including household energy, electronics, clothes and fuel, as well as 17 % of food products, the newspaper said. The central bank said in May it expects the average annual inflation rate at 3.3 % this year and 3.4 % in 2006. The government will monitor whether retailers bring prices in line with tax cuts and set up a task force to prevent them from ``swallowing'' the difference.