Leaders of major UK supermarkets have expressed concerns that any potential increases in taxes on the sector could lead to further food price hikes for consumers. Supermarket executives, including representatives from Tesco, Asda, Sainsbury’s, Morrisons, Lidl, Aldi, Iceland, Waitrose, and M&S, submitted a letter to Chancellor Rachel Reeves in anticipation of next month’s Budget. The letter warns that household budgets would be negatively impacted if taxes, such as increased business rates, are enacted.
According to the Treasury, addressing food price inflation is a priority, and it plans to reduce business rates for specific sectors such as butchers and bakers. Supermarket leaders stated that higher taxes would complicate their efforts to provide value to customers, especially amidst rising expenses. They noted the persistence of high food inflation, which is expected to extend into 2026.
With the Chancellor’s Autumn Budget approaching, there is speculation regarding tax and spending policies. Reports suggest that Reeves may need to implement tax increases due to a projected £22 billion shortfall in public finances. This situation arises from rising government borrowing costs and weaker growth forecasts.
As supermarkets lobby for lower taxes, the rising cost of essential goods continues to affect consumers. Data from the Office for National Statistics indicates significant price spikes for various staples, with butter prices increasing by 19% and milk by over 12%. Factors such as poor global harvests and escalating trade tensions contribute to food inflation.
Supermarket executives, including Helen Dickinson of the British Retail Consortium, emphasize the struggle to keep prices affordable in light of increasing costs. Tesco and Lidl recently reported surges in profits despite rising expenses, highlighting the impact of taxes and inflation on the grocery sector.
In conjunction with these developments, the government is set to address business rates that significantly affect large retail establishments. The forthcoming Budget is expected to clarify the measures that will be imposed starting in April 2026. Supermarkets have requested a reassessment to alleviate the industry’s tax burden, believing this could help combat food inflation effectively.
Source: https://www.bbc.com/news/articles/c620gy43pe4o?at_medium=RSS&at_campaign=rss