The VAT increase and the end of 99p?

January 4, 2011

lifestyle

So the VAT went up today, so how could we not talk about it? While the rise from 17.5% to 20% isn’t too much, it is going to add a little bit to everything we buy, which could mount up to a lot.

One thing that seems to have cropped up is the issue of the 99p on the end of a lot of items. It is well known that having something priced at £9.99 not only means that shops can say it is below £10, but it also makes us feel as though we are spending less. However, today when I was shopping on Argos’s website, (as I am moving house soon) I noticed all the £9.99 things now cost £10.20.

So what happens now? If shops still want to hold on the 99p, they’re either going to have to drop their prices, or raise them all the way to £10.99, which isn’t too cool.

I also wonder what this means for the pound shop. While a lot of the goods in the pound shop aren’t supposed to cost that in the first place, does this means we’ll be getting less known brands on offer in the pound shop, and more what we would expect for the price.

Many customers are hoping that retailers won’t round-up prices just to keep them at a desirable number, as that would end up costing us even more than the VAT increase already will.

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