Department store group John Lewis may steal a march on the rest of the high street by not passing on the higher rate of VAT until the end of January.
The VAT rate is expected to revert from 15% to 17.5% on January 1 but, according to the Financial Times, John Lewis managing director Andy Street said the retailer did not expect to raise its prices until four weeks later.
If the retailer does hold off, the increased prices would come into effect at the end of January, meaning that the John Lewis clearance Sale would still be at the lower rate.
Street said that the retailer’s price promise ‘Never Knowingly Undersold’ meant that that it could not increase prices until other retailers had done so.
The decision by John Lewis to resist passing on the VAT increase could eat into profits as retailers compete for crucial sales during the new year period, but Street hoped the decision would help win customer support.
Marks & Spencer has already said it will pass the rise on immediately.
Sainsbury’s boss Justin King refused to be drawn on t plans regarding the increase but said, because the increase was “planned for slap bang in the middle of Sales, I would be surprised if we saw prices immediately pop-up on January 1 in the market.”