Supermarkets have used the increase in VAT to pass on thousands of price hikes over and above the cost of VAT, The Grocer can reveal.

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

But although the majority of these price rises were in line with the revised rate of VAT, which returned to 17.5% 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 2.2%, 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.

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. “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%,” she claimed. “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,” she added.

Asda and Sainsbury’s appear to be phasing in increases over a longer period, but the same practice is in play. 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 hikes 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.

The total value of Asda price increases on individual Asda SKUs in the last week was £2,497, while its price cuts totalled £893.

An Asda spokeswoman said the chain had pledged to delay the VAT rise on around half its VAT-able 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 over 1,000 prices by more than the change in VAT.

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