Asda’s chairman has urged Rachel Reeves to stop “taxing everything in some way, shape or form”.
Allan Leighton advised the chancellor to invest in Britain if she wants to grow the economy, not launch a new tax raid in her upcoming budget later this year.
Ms Reeves is grappling with the various options at her disposal to fill a £50bn hole in the public finances, while she attempts to stay within her self-imposed fiscal rules.
Among the policies believed to be under consideration by the chancellor, the most headline-grabbing is a so-called “mansion tax”, which would hit the owners of high-value properties with capital gains tax when they sell their homes.
A likely move will also see the Treasury extend the freeze on income tax thresholds. This means that as wages rise with inflation, over the years workers are dragged into higher tax bands and end up paying more.
And this week, it was reported Ms Reeves is plotting a tax raid on landlords by applying national insurance (NI) to rental income.
Separately, Ms Reeves looks set to raise business rates for larger premises, according to reports, which would lead to increased bills for bigger supermarkets.
Mr Leighton described the proposed changes as “very unhelpful” in an echo of concerns raised by Tesco and Sainsbury’s.
The Asda executive chairman told The Telegraph: “All these things don’t make life easier. They are contributing to inflation, and inflation is hitting the pocket of the consumer.”
This week, new figures revealed that food prices have risen at their fastest pace in 18 months.
According to the British Retail Consortium (BRC)-NIQ Shop Price Monitor, food inflation hit 4.2 per cent this month, up from 4 per cent in July, marking the highest level since February 2024. Bosses at the trade body warned the acceleration “adds pressure” to families already struggling with the cost of living.
Mr Leighton explained that supermarkets were battling to keep prices down for customers as they attempt to “find a way through”.
The uptick in food prices comes after the Bank of England said earlier this month that the increase in national insurance contributions in April had contributed to accelerating food prices.
Helen Dickinson, chief executive of the BRC, said: “Shop price inflation hit its highest rate since March last year, fuelled by food price rises.
“This adds pressure to families already grappling with the cost of living.
“Retailers continue doing everything they can to limit price rises for households, but as the Bank of England acknowledged, the £7 billion in new costs flowing through from last year’s budget has created an uphill battle for retailers.”
More than 60 retail bosses, including chiefs at Tesco, Sainsbury’s and Boots, warned Ms Reeves last week that raising taxes further in the autumn budget could contradict her plans to improve UK living standards.
In the letter, coordinated by the BRC, the bosses said they were expecting the rate of food and drink inflation to reach 6 per cent later this year.
Mike Watkins, head of retailer and business insight at NIQ, said: “The uptick in prices reflects several factors: global supply costs, seasonal food inflation driven by weather conditions, the conclusion of promotional activity linked to recent sporting events, and a rise in underlying operational costs.
“As shoppers return from their summer holidays, many may need to reassess household budgets in response to rising household bills.”
