Morrisons is pledging to cancel out the effects of today’s rise in VAT by slashing prices, with January savings totalling £210m.

Morrisons said it estimates that the VAT increase means each family will have to pay £520 extra per year, so it has reduced the price of an average family basket of groceries by £39.27 a week, a saving of £2,042 a year.

Morrisons’ biggest ever Price Crunch campaign will slash the price of over five thousand items.

Pre-Price Crunch, a typical shop of 44 items would have cost £96, but from January 3, these items now cost £56.73.

Richard Hodgson, Morrisons group commercial director said: “We understand that 2011 is set to be a tough year for consumers, so our Price Crunch helps cancel out the effect of the rise in VAT. These are not 1p price cuts - these are genuine savings on essential groceries that will cut the cost of the weekly shop significantly at a tough time for families.”

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