Britain’s biggest supermarkets have warned Rachel Reeves her tax hike plans will drive up food prices.
In a stark letter to the Chancellor, the nine major grocers said growing cost pressures meant grocery prices had been rising over the past year and were expected to rise further.
‘This matters to millions of ordinary people who are struggling with the cost of living,’ they wrote.
The letter, organised by the British Retail Consortium (BRC), has been signed by executives at Asda, Tesco, Aldi, Iceland, Lidl, Marks and Spencer, Morrisons, Sainsbury’s and Waitrose.
It said that if higher taxes are levied in next month’s Budget, the grocers would find it more challenging to deliver value and households would inevitably feel the impact.
It added: ‘Given the costs currently falling on the industry, including from the last Budget, high food inflation is likely to persist into 2026.’
The sector has seen annual costs jump by £7billion, driven by the increase in National Insurance contributions and the minimum wage after last year’s Budget.
Food and drink prices in the UK have risen in the past year, contributing to overall inflation remaining at 3.8 per cent.
Nine major grocers have written to Rachel Reeves (pictured) to warn that growing cost pressures meant prices had been rising over the past year and were expected to rise further
Food and drink prices in the UK have risen in the past year, contributing to overall inflation remaining at 3.8 per cent (Stock Image)
The rise has been partly blamed on Labour’s NI hike, which resulted in many firms raising prices for customers to offset the rise in costs.
High energy and ingredient costs, as well as a packaging tax, have also driven up prices, manufacturers say.
Leading chief executives have made it clear they feel they have no choice but to hike prices if costs on businesses continue to go up.
Earlier this month, Tesco chief executive Ken Murphy said tax hikes were ‘an additional burden on the industry’.
And Asda chairman Allan Leighton has said the Chancellor must move away from ‘taxing everything’.
Some of the big supermarkets have raked in huge profits in recent years. Tesco expects to make between £2.9billion and £3.1billion this year.
But in the letter supermarkets insisted: ‘The UK grocery market is highly competitive, with narrow profit margins that are well below those found in other industries.’
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Cost of living blow as Britain’s biggest supermarkets warn Reeves’ tax hike plans will lead to food price rises