Fears have been expressed that VAT may be imposed on food in next year’s Budget.
Politicians are understood to be considering a levy of about 5% on food in a bid to address the country’s financial challenges, a “senior supermarket figure” told the Sunday Express.
The source said VAT on food is “on the agenda” and that, although overall weekly spend would likely remain unchanged, shoppers on a limited budget might switch to cheaper products and cut back on treats.
After last year’s temporary VAT reduction to 15%, the rate will return to 17.5% at the start of 2010. Retailers fear that after next year’s general election it could be raised further on non-food items.