Additionally, while the average tariff on car imports fell from around 30% to 25%, the pass-through to consumer prices will be blunted by a new “recycling fee” introduced to cover the cost of scrapping vehicles at the end of their lifetime. According to the Capital Economics Team, “As a result, the price of imported cars is expected to remain broadly unchanged.”
“Putting all of this together, we estimate that the fall in import tariffs may knock around 0.2%-pts off the headline inflation rate this year. However, even this may be too optimistic. Some recent comments from business suggest that the reduction in tariffs is likely to be absorbed in producers’ margins.” they add.