We’re all certainly aware of the rise in VAT that the year 2011 has brought with it. And we’re all probably feeling the slight pinch in our pockets every time we buy an innocuous item from the supermarket.
A thought raised by a BBC article though: what happens to prices ending in 99p as a result?
Adding 99p to a price has been a long-known retail tool to give the psychological illusion that we are paying less for our common household items. So how have retailers reacted to this VAT increase?
The article says that some analysts fear that instead of converting £9.99 to £10.20, which has less aesthetic appeal, we may find that some items are rounded up all the way to £10.99. It should be noted that this has been dismissed by the British Retail Consortium (BRC).
Now that the sales have come to a close, it seems like a ‘rat race’ to see which retailer will bite the bullet first and raise their prices to accommodate this tax change.
The other fear, though, voiced by a member of the BRC, is that for retail outlets to stay competitive they may have to slash their staff numbers.
Sounds like a vicious circle, but makes for interesting reading…
