The details of the ruling coalition’s deficit-reduction package won’t be revealed until fiveminutes to 12 noon today, but it appears from media leaks that grocery prices will dropslightly as of next year due to a VAT reduction from 15% to 12%. This would make the CRsomewhat less uncompetitive with regard to food prices in neighboring countries. Econo-mist Miroslav Zámečník said last week on Czech TV that his children tell him that groceriesare now even cheaper in London due to the high prices here and the strong crown. Alcoholprices are still of course much lower in the CR, but a planned new 21% VAT rate on draftbeer and a higher excise tax on hard alcohol will put a dent in this advantage. Higher pricesare one way to deal with Prague’s lingering status as a stag capital of Europe. We’ll know thegovernment’s tax and budget plans have gone completely awry when guidebooks and sites start warning against Prague, and Czech guys start planning stag nights in London.

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