Consumers face VAT confusion

VAT is due to return to 17.5% at the start of the new year, after the government reduced it to 15% in December 2008 in a bid to boost consumer spending.

Supermarket giants Tesco, Sainsbury's and Asda have said that they will delay passing on the increased rate on thousands of products. Argos and John Lewis both say they will not raise prices until the end of January and the Arcadia Group, which owns Topshop, Dorothy Perkins and BHS, has said it will absorb the cost of the increase in all of its stores.