Asda, the grocer, has said it would shelter shoppers from the worst of the VAT rise in the new year.
Asda chief executive Andy Clarke told The Sun newspaper that the Walmart-owned retailer would do “everything we can” to absorb the 2.5 percentage point VAT increase, which will come into force on January 4.
He said: “How? It’s simple. The more we reduce our costs, the more we can keep prices low.”
Retailers generally face a raft of cost pressures ranging from the rising expense of sourcing from the Far East to higher commodity prices which, combined with the VAT increase, are likely to lead to higher prices for consumers later this year.
Yesterday, Chancellor George Osborne confirmed that VAT would rise to 20% in January next year and that kidswear and food remained exempt from the tax.