Food inflation is projected to exceed 5 per cent and persist at that level well into next year should the retail industry face further tax hikes in the upcoming autumn Budget, sector leaders have warned.
The British Retail Consortium (BRC) has expressed significant concern that around 4,000 large shops could be affected by the Government’s proposed surtax on properties with a rateable value over £500,000.
This potential increase in business rates, the BRC suggests, would likely translate into higher prices for consumers.
A recent BRC survey highlights public apprehension, with “prices rising faster than wages” identified as the primary worry for 57 per cent of respondents, a figure rising to 61 per cent among working people.
This concern surpassed anxieties over tax rises (49 per cent) and increasing unemployment (26 per cent).
The warning arrives as the Office for National Statistics (ONS) reports overall inflation at 3.8 per cent, almost double the Bank of England’s 2 per cent target. Food inflation, specifically, has reached 4.9 per cent, marking its highest point since the 2022/23 cost-of-living crisis.
Retail price inflation has been rising steadily over the last year, which the BRC said had been accelerated by the impact of the previous budget – which significantly increased employment costs, as well as introducing a new packaging tax on retail businesses.
Last week, the Bank of England held off from an interest rate cut amid fears that rising food prices were putting upwards pressure on headline inflation.
BRC chief executive Helen Dickinson said: “The Government risks losing the battle against inflation and working families are understandably worried.
“With many people barely recovering from the last cost-of-living crisis, the Chancellor will want to protect households and enable retailers to continue doing everything they can to hold back prices.
“The Treasury is currently finalising its plans to support the high street, including a much-needed reduction in business rates for retail, hospitality and leisure premises. However, the biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties.
“This would effectively be robbing Peter to pay Paul, increasing costs on these businesses even further and forcing them to raise the prices paid by customers.
“Removing all shops from the surtax can be done without any cost to the taxpayer, and would demonstrate the Chancellor’s commitment to bring down inflation.”
