The British Retail Consortium (BRC) has warned that the ongoing Middle East conflict is driving up costs across the supply chain, and has called on the government to take action to help retailers keep prices affordable for consumers.
Consumer Concerns Over Rising Prices
A survey conducted by the BRC revealed that 80% of people fear the conflict will push up food prices. Additionally, 73% expect price increases on non-food products, while 81% are worried about rising energy bills, 76% about petrol and diesel costs, and 68% about tax increases.
Domestic Cost Pressures
The BRC emphasised that while the Middle East situation is a significant factor, retailers are also grappling with domestic policy decisions. Retailers have absorbed an extra £6.5 billion in employment costs due to higher national insurance contributions and the national living wage, along with a new packaging tax costing £1.6 billion. Upcoming regulatory burdens include guaranteed hours provisions under the Employment Rights Act and the proposed reformulation of thousands of food lines under the new nutrient profiling model.
Government Action Needed
Food retailers met with Chancellor Rachel Reeves in early April, urging the removal of energy policy levies, network charges, and system fees that now constitute 57% to 65% of a typical business electricity bill. They also requested a delay in the introduction of the updated nutrient profiling model and a review of the triple packaging levy, which is forecast to cost retailers over £2 billion annually.
BRC chief executive Helen Dickinson stated: “The Middle East conflict is driving up costs across the supply chain and families are right to be concerned. But not every pressure bearing down on retailers comes from the Gulf. Higher national insurance, packaging levies, new regulations, and business energy charges are all domestic policy decisions, made in Westminster, and they can be addressed there.”
She added that other governments, such as Germany, have already taken steps to reduce electricity costs for businesses by moving levies off bills. “The UK should be moving in the same direction, not treating global instability as cover for inaction on costs of its own making,” Dickinson said. “Every cost government chooses not to address is a cost that will find its way into someone’s shopping basket. That is a political choice, and it is one ministers still have time to change – but the window to act is closing.”
