The British Retail Consortium has said it was "nonsense" to suggest retailers would use the VAT rise in January as a cover for price increases.

The move comes after research from professional-services firm KPMG published today suggested 60% of retailers and consumer-products manufacturers planned to raise prices by more than the 2.5 percentage point VAT increase that comes into force on 4 January.

BRC spokesman Richard Dodd said all the evidence suggested that rather than passing on price increases, retailers were "doing all they can" not to pass on inflationary pressures to consumers. This was likely to continue after 4 January, he added. "Retail is going to be even more competitive in the New Year as consumers rein in their spending in the face of pressure such as public-sector job cuts."

Respondents were able to take part in the KPMG survey on an anonymous basis.

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