grocery shopping prices receipt money cost of living inflation

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Retail chiefs have warned food inflation will rise further

Retail bosses including the chiefs of several major supermarkets have written to the Chancellor warning of inflation if more taxes are heaped on the industry in the autumn budget.

The chiefs of Aldi, Asda, JLP, Lidl, Morrisons, Sainsbury’s and Tesco are among 60 retail bosses to have signed the letter to Rachel Reeves.

It underlines the £7bn added to retail costs this year, including increased employer National Insurance and a new packaging tax in the form of extended producer responsibility, and warns it is driving up prices for ordinary families.

The letter reiterates a BRC call for the Chancellor to rethink business rates reforms and exclude all shops from a planned new higher rate for large properties from April 2026.

“Food prices – which had begun to ease – are once again climbing,” it says, pointing to BRC analysis which anticipates food inflation will hit 6% later this year.

“The impact is further being felt by communities as retail investment falls and 100,000 retail jobs have been lost over the past year alone.

“Labour’s manifesto made a clear and welcome promise to deliver good jobs and higher living standards, but if future policy decisions lead to rising prices and fewer jobs, then those commitments are at risk. Instead, the retail industry is uniquely placed to help deliver the government’s central economic mission given our presence in almost every community across the UK.

Read more: More than 100 large supermarkets ‘at risk of closure’ thanks to business rates reforms

“We are committed to investing in our businesses and providing good-quality jobs for people at all stages of their career, whether that’s someone entering the workforce for the first time, wanting flexible work to fit around their family commitments or returning to work later in life. We compete fiercely and continue to keep a laser focus on prices and value for our customers, absorbing cost pressures wherever we can.

“It is for these reasons we support your plan to reduce business rates on retail, hospitality and leisure. To deliver the improvements to investment the government seeks, support local employment, and help relieve the pressure on prices, it is essential these changes result in a significant reduction in the industry’s tax burden. No store should pay more as a consequence, with all shops excluded from the new higher multiplier. As we have outlined to your officials, these outcomes can be achieved at no cost to the Exchequer.”

Under the Non-Domestic Rates Bill, which received Royal Assent in April, business rates are set to rise from 2026 across all sectors for properties with a rateable value of more than £500,000 a year. The additional tax collected is intended to fund a business rates discount for smaller properties in retail, hospitality and leisure, with a rateable value of less than £500,000.

Helen Dickinson, CEO of the BRC, which orchestrated the letter, said: “Last year’s budget added £7bn to retailers’ costs, which in turn are driving up prices for ordinary families. This is why Britain’s largest retailers are writing to the Chancellor, calling for action on business rates to fix a system which sees retailers, as 5% of the economy, pay over 20% of the total rates bill. Without reform, this system will continue to cost jobs, limit investment and push up prices for households everywhere.

“The Chancellor has the opportunity at the next budget to deliver a meaningful reduction in retail, hospitality and leisure bills, while ensuring that no shop – large or small – pays more than it presently does. This can be done at no cost to the public purse and with huge benefits to the public good. It is the moment for government to buy into retail and make a difference to millions of families up and down the country.”