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ISTANBUL: Turkey's new cut to the value added tax (VAT) on basic food items should decrease overall inflation by 1.5 percentage points in two months, according to calculations by three economists.
On Saturday President Tayyip Erdogan said VAT on basic foods - including water, eggs, dairy products, coffee, tea, fruits and vegetables - would drop to 1% from 8% to ease strains from inflation having risen to near 50%.
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The tax cut is expected to trim about 25-35 billion lira ($1.8-$2.6 billion) from Turkey's budget.