Claims that last year’s 2.5% VAT rate cut has stimulated retail sales have been rejected by marketing consultancy Verdict Research.
It has contradicted findings by the Centre for Economics and Business Research that sales growth last November and December of 1.6% and 2.3% was attributable to the cut.
Instead, Verdict claims extensive discounting was the main driver behind the increase, along with notably weak trading in December 2007.
“If you look at overall inflation in retail, it’s in positive territory but that’s because of food, which is going up in price.
“Most other sectors are strongly deflationary because of the amount of discounting going on,” said Verdict consulting director Neil Saunders.
