Giles Hurley, the chief executive of Aldi UK, has expressed concerns that additional costs imposed by the upcoming Budget could lead to increased food prices. He indicated that the effects of last year’s National Insurance increase and new packaging regulations have already impacted prices across the supermarket sector. Hurley emphasized that any policies affecting business operating costs should be carefully considered due to the risk of those costs being passed on to consumers.
In a letter sent last month, over 60 retailers urged Chancellor Rachel Reeves to refrain from imposing further taxes on an industry that has already faced significant challenges from government revenue measures. Aldi reported that its annual sales rose to £18.1 billion, although profits fell by over 20% to £435.5 million, attributed to investments in price reductions, infrastructure, and increased wages. Aldi has not specified the potential impact of tax changes on its operations for this year.
So far in 2023, Aldi has invested more than £300 million to mitigate rising costs and maintain competitive pricing. Despite these efforts, the price of essential products, such as lean beef mince, has increased significantly this year, driven by a 30% rise in cattle prices and declining herd sizes. Hurley highlighted that global factors, including rising commodity prices, have contributed to food inflation, which has reached 4.9% in the UK, compared to 3.9% in the EU.
The Bank of England has pointed to new levies on retailers aimed at reducing waste as a factor that could further elevate food prices in the coming months. The Food and Drink Federation anticipates food inflation could rise to 5.7% by year-end and remain at 3.1% until 2026. Furthermore, they noted that new packaging regulations will impose an estimated £1.1 billion in costs on food and drink businesses starting next month.
Hurley called for increased support for farmers to enhance food production in the UK, suggesting this could positively influence inflation. Meanwhile, Aldi is expanding its operations, planning to open 80 new stores backed by £1.6 billion in investment, bringing its total to 1,060 locations. The forthcoming Budget announcement is scheduled for November 26.
Source: https://www.bbc.com/news/articles/c0r0zr7ed9yo?at_medium=RSS&at_campaign=rss