Supermarket leaders in the UK, including executives from large chains like Tesco, Asda, Sainsbury’s, and Morrisons, have expressed concerns over potential tax increases in the upcoming budget, warning that this could further elevate food prices for households. In a letter addressed to Rachel Reeves, they indicated that any rise in taxes, such as a new surtax on business rates, would pose significant challenges to their ability to provide value to customers.
They noted that the industry is already facing increasing costs, which may lead to sustained high food inflation extending into 2026. This situation is compounded by the financial pressures from previous budgets, including a £25 billion increase in employer national insurance contributions and a 6.7% rise in the national living wage, both of which took effect in April.
The British Retail Consortium (BRC) has raised alarms about potential higher business rate tax bills for large retailers, particularly if they are included in a new tax framework targeting properties valued over £500,000. BRC Chief Executive Helen Dickinson suggested that exempting supermarkets from this surtax could help in controlling food inflation, noting that it would not impose additional costs on taxpayers.
Recent official data indicates that UK inflation remained steady at 3.8%, while annual food price inflation decreased modestly from 5.1% in August to 4.5% in September, the first slowdown since March. The supermarket leaders, along with those from Aldi, Lidl, Marks & Spencer, Waitrose, and Iceland, emphasized that addressing the tax burden on retail would demonstrate government support for the industry and its commitment to mitigating food inflation.
A Treasury spokesperson affirmed that tackling food inflation remains a priority, citing measures such as increases in the national living wage and reductions in business rates for certain shops. The government also maintains that increases in property rateable values might not necessarily lead to higher tax bills.
Source: https://www.theguardian.com/business/2025/oct/26/supermarkets-reeves-tax-rises-push-food-prices-higher