Britain’s major grocery chains have issued a caution about rising food prices. Top executives are urging the Chancellor to exempt stores from a proposed business rates surcharge, warning that consumers will end up paying more. The British Retail Consortium (BRC) organized a letter to Rachel Reeves, stressing that protecting retailers from extra taxes would help address food cost increases. The letter, signed by leaders from Tesco, Sainsbury’s, Aldi, Asda, Iceland, Lidl, Marks & Spencer, Morrisons, and Waitrose, highlights concerns that big retailers might face higher business rates if included in the Government’s planned surcharge for properties valued over £500,000.
The initiative aims to fund discounts for smaller high-street businesses set to benefit from reduced business rates under the proposed scheme expected to be confirmed in the upcoming autumn Budget announcement, with implementation scheduled for April. The supermarket executives expressed worries about their diminishing capacity to absorb added expenses. They emphasized that any further tax hikes, like the new surtax on business rates, would make it tougher to offer value to customers and would ultimately impact households.
The letter underlines the industry’s mounting costs and the potential for prolonged high food inflation due to additional taxes. It points out that large retail properties, although a small percentage of all stores, contribute significantly to the total retail business rates bill, suggesting that further increases could drive food prices up even more. The letter concludes by calling on Ms. Reeves to address the disproportionate tax burden on the retail sector, signaling support for the industry and the Government’s commitment to tackling food inflation.
Helen Dickinson, the BRC’s chief executive, stated that supermarkets are striving to maintain affordable food prices but are facing substantial financial pressures, with over £7 billion in extra costs incurred in 2025 alone. From elevated national insurance contributions to new packaging taxes, the industry is under significant strain. A comment from the Treasury on the matter is awaited.