Today's VAT increase from 17.5% to 20% has caused political ructions, with opposition leader Ed Miliband calling the rise unfair and Chancellor George Osborne defending the tax increase. But what will the new VAT rate mean for your shopping basket in the weeks to come?

In the home

In the short term, the increase may not have much impact on the price of a weekly shop at all. Many food items are entirely exempt from VAT, the exceptions being "luxury" items such as chocolate, crisps and ice-cream as well as meals in restaurants and takeaways. In addition, several supermarkets have pledged not to increase VAT on existing stock, adding the new rate only to new items of clothing and homeware.

Sainsbury's and Tesco have both pledged not to increase the price of non-food items until the end of January, giving shoppers on Stroud Green Road a few weeks' grace. The new VAT rate is likely to be phased in on home and lifestyle items after the end of this month.

On the road

One big area where the VAT increase is having an immediate effect is on the price of petrol. Prices have risen by an average of 3p per litre, and that seems to be reflected at the local pumps - my top-up this morning cost £1.24 per litre compared to around £1.21 before Christmas, meaning each full tank costs an extra pound.

A bigger impact still will be seen on the price of a new car - a new supermini will cost an extra £250 on a typical £10,000 (ex VAT) model, and a new family saloon costing £15,000 (ex VAT) will now come in at £375 more than the 2009 price. People are already holding onto cars for longer - a report last year by the Department of Transport found that the age of vehicles on the road was increasing. Could this extra expense deter more people from making new car purchases this year?

In the wardrobe

Children's clothing is exempt from VAT, so there'll be no increase in the prices of dungarees, party frocks, and school uniforms (at least, not for that reason). For grown-ups, some retailers are again choosing to sell off old stock at the existing prices, and of course there are still bargains to be had in the sales, so now could be a good time to shop around before the tax rise hits.

Unlike most retailers, charity shops selling donated goods are zero-rated for VAT, meaning there will be no price increase on what are already knock-down prices, especially if you shop around now when the shops are swimming with unwanted Christmas presents and wardrobe clearouts. Because of saftey regulations it's not possible to buy electrical items at charity shops - which is where the Bright Sparks Swap Shop event this Saturday may come in very handy!

Have you been affected by any of the VAT rises in this story? Will you be stocking up in the sales or avoiding the high street like the plague? Let us know below!

Image: I See Modern Britain