Many retailers fail to pass on VAT increase to shoppers
Shop price inflation rose just 2.3% in January, despite the VAT increase, as many retailers failed to pass the increase on to shoppers, according to the BRC-Neilsen Shop Price Index.
Non-food inflation accelerated to 1.9% in January, up from 1.4% in December.
British Retail Consortium director-general Stephenson Robertson said: “January’s VAT increase was lost among a huge number of discounts and promotions. We would have expected non-food inflation to be higher because of the VAT rate reversal, but many shops held off passing the extra costs onto their customers.
"Fierce competition, in the face of weakening consumer demand and uncertainty about the recovery, is keeping shop prices down.”