British Supermarket Chains Warn Higher Inflation due to Budget Costs
Policy changes, such as planned hikes in business rates and increases in employer National Insurance contributions, are expected to result in higher supermarket prices, according to British supermarkets.
Retail industry leaders have expressed concerns over the impact of tax adjustments announced in the recent Budget, suggesting that these changes will lead to an increase in costs that will ultimately be passed on to consumers.
Sainsbury’s chief executive Simon Roberts indicated that the rise in employer NICs alone will cost the company £140 million, even before accounting for wage increases.
Labour’s decision to raise the employer NIC rate to 15 percent and increase minimum wages will further contribute to the overall increase in costs for businesses.
Chancellor Rachel Reeves proposed that businesses could absorb the NIC increases by reducing profits or improving efficiency, but retail executives like Roberts argue that absorbing such costs without affecting prices is not feasible.
In response to the tax changes, major retailers like Asda anticipate significant additional costs, with chairman Lord Stuart Rose acknowledging that prices may have to rise to offset the impact.
Sainsbury’s also raised concerns about the planned increase in business rates for properties with a rateable value of £500,000 and above, calling for urgent reform of this tax system.
Furthermore, British farmers are protesting against the Treasury’s decision to eliminate agricultural property relief, fearing they may be forced to sell inherited land to cover the tax bill.
Both Sainsbury’s and Asda reported their financial results for the quarter, with Sainsbury’s showing growth in sales and Asda planning additional investments to enhance store operations during the upcoming holiday season.
Overall, these tax changes and policy adjustments are expected to have inflationary effects on prices and costs within the retail industry, leading to potential price increases for consumers.
