Tesco has become the first UK supermarket to cover the cost of the tampon tax for customers, after it cut the price of nearly 100 women’s sanitary products by 5%.

The retailer said that the move – which sees Tesco absorb the cost of VAT, set at 5% on sanitary items – would help women who found themselves in financial difficulty.

Michelle McEttrick, Tesco group brand director, said: “For many of our customers, tampons, panty-liners and sanitary towels are essential products. However, the cost of buying them every month can add up, and for many women and girls it can be a real struggle on top of other essential items. That’s why we are reducing the cost of these products by 5%.”

The price cut will affect both Tesco’s own-label items and more well-known brands.

Campaigners have been demanding that the government scraps VAT entirely on women’s sanitary products for years, but due to EU rules it has been unable to lower the rate below 5%.

To stave off a backbench rebellion by an alliance of feminist and Eurosceptic MPs, David Cameron persuaded European ministers last year to agree to change the rules to allow zero-rating of sanitary products. But the earliest a new law could come into force would be 2018.

Until then, the government promised to spend the revenue from the tax on women’s charities, initially including the anti-abortion and pregnancy counselling organisation Life. In March, the Department for Digital, Culture, Media and Sport announced the latest tranche of grants, which took the total handed out to £17m.

Paula Sherriff, the Labour MP who has led the campaign against the tampon tax, has praised Tesco’s decision and called on its rivals to follow suit. She said: “It would have been completely unacceptable if abolishing the tampon tax had just led to big businesses boosting their bottom line at the expense of women buying what are essential goods, which is why we pushed the supermarkets to sign up to a deal to pass the cut on.

“But this goes a step even further, by reducing prices right now – and I hope the other big retailers now consider doing the same.” The government and the EU should now announce a clear timetable for abolishing VAT on sanitary items altogether, Sherriff also said.

Five major supermarkets – Tesco, Sainsbury’s, Asda, Morrisons and Waitrose – and Boots, the high street chemist, had originally pledged last year to pass the savings on to customers when the VAT is finally removed.