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VAT hike will add £33 a year to shopping baskets

Not all food staples are exempt from 2.5% increase

Supermarket shopping

Consumers can expect to shell out an extra £33 a year on their supermarket shopping, even though many food items are exempt from the VAT rise that comes into effect on 4 January 2011.

Research carried out by grocery comparison site, mySupermarket shows that an average basket of supermarket shopping will have increased by more than £66 since the 15% rate seen in 2009, as VAT hits 20% in the new year.

Many shoppers are unaware that plenty of grocery staples will be affected by the 2.5% rise, in addition to non-food items such as toothpaste and cleaning products.

We’ve put together a guide on how to save money on your weekly shop where we give you the low down on which supermarket own brands beat the big names in our coffee taste tests, and explain the difference between ‘best before’ and ‘use by’ dates – which could stop you throwing away perfectly decent food.

VAT exemptions

The mySupermarket study highlights some of the bizarre discrepancies between items that are and are not exempt from VAT.

A gingerbread man with two chocolate eyes is exempt, for example, whereas one with any more chocolate – a couple of extra buttons maybe – has standard-rate VAT added to the price. Likewise, unshelled salted nuts and tortilla chips are exempt, but shelled salted nuts and potato crisps aren’t.

Which? shopping expert Sarah Dennis says: ‘We’re all used to hearing that food is exempt from VAT – but as the mySupermarket study shows, this isn’t always the case. 

‘The impending VAT rise shouldn’t have a dramatic effect on the cost of your shopping, but you can still save a few pence by comparing prices in store and making some smarter shopping choices.’

Bigger isn’t always better

A Which? investigation in September 2010 showed that buying bigger versions of your usual products doesn’t always mean better value – and found that in some cases, the advertising used to promote such deals was misleading for the consumer. Read the full report here.

The VAT increase doesn’t come into effect until January 2011, but if you want to save money on your Christmas dinner before then, we’ve put together some top tips in our guide ‘seven ways to cut the cost of Christmas‘. 

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