Stores use VAT rise to pass on hidden charges to 4,500 items

BRITAIN'S biggest supermarket chains have come under fire for hitting shoppers with "hidden" price rises on everyday products.

Leading supermarkets have used the increase in VAT to pass on thousands of price hikes over and above the rise according to trade magazine the Grocer.

Data provided by online price analysts Brand View reveals that in the week from 29 December to 5 January, the price of 12,500 items including confectionery, snacks, alcoholic drinks and household cleaning products, as well as non-food items, increased in Tesco, Asda and Sainsbury's.

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But the magazine says that although the majority of these price rises were in line with the revised rate of VAT, which returned to 17.5 per cent (from 15 per cent) on 1 January, around 4,500 of the increases were greater than the VAT hike.

The Grocer's investigation, which excluded promotional prices that are specifically flagged, but included some round pound and other deals not highlighted to web shoppers, counted how many increases were made at the level of the additional VAT.

It found that around one in five of Tesco's price hikes was greater than the increase in VAT. Tesco also introduced its initial wave of VAT-related price hikes more rapidly than its rivals, increasing more than 4,000 prices on 1 January alone.

Adam Leyland, editor of the Grocer, said yesterday that the supermarkets have been claiming they are absorbing the extra costs associated with VAT.

But he added: "It's a case of lies, damned lies and VAT-related statistics."

A Tesco spokeswoman admitted the supermarket had increased some of its prices over and above the revised rate of VAT, but said these changes reflected higher costs from suppliers. She said: "We work hard to keep prices down for customers, which is why we have frozen the VAT on thousands of products at the lower rate of 15 per cent.

"A small proportion of products will have increased in price, but this is either because of special offers coming to an end, or an increase in the cost price. Many more prices have fallen than increased and, overall, consumers continue to get a great deal."

The magazine said that Asda and Sainsbury's appear to be phasing in increases over a longer period, but the same practice is taking place.

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On 29 December, Asda increased the price of 446 products. Around half the hikes mostly in the alcohol category were over the cost of the VAT.

The price rises also bring to 5,000 the number of prices that increased ahead of Asda's New Year 'rollback' price savings initiative, with 3,270 of these equal to the VAT increase. An Asda spokeswoman said the chain had pledged to delay the VAT rise on around half its items, while the rest would increase.

Sainsbury's prices followed the same trend, though the retailer only started systematically processing the VAT increases online from 4 January.

To date, it has increased 1,900 prices in line with VAT on its website, upping more than 1,000 prices by more than the change in VAT.