Supermarket bosses have warned Chancellor Rachel Reeves that tax rises in the upcoming budget could push food prices even higher. In a joint letter, leaders from Tesco, Asda, Sainsbury’s, Morrisons, Aldi, Lidl, Marks & Spencer, Waitrose, and Iceland said households would “inevitably feel the impact” if the government imposes a surtax on business rates for large retailers.
The letter argues that higher taxes would make it harder for supermarkets to keep prices down, especially as the industry already faces rising costs from the last budget, including a £25bn increase in employer national insurance and a 6.7% rise in the national living wage. The signatories warned that high food inflation is likely to persist into 2026 and should not be prolonged by any new measures.
The British Retail Consortium (BRC) expressed concern that big shops could face much higher business rate bills if included in the new additional tax for properties with a rateable value above £500,000. BRC chief executive Helen Dickinson said exempting supermarkets from this surtax would help keep food inflation under control, adding that it would not cost taxpayers, as large office blocks and industrial plants could pay slightly more instead.
Official data shows UK inflation remained at 3.8% last month, while annual food price inflation eased to 4.5% in September, the first slowdown since March. However, cumulative effects mean grocery bills remain significantly higher than a few years ago.
A Treasury spokesperson said tackling food inflation is a priority, citing increases in the national living wage and lower business rates for smaller shops. The government believes that even if a property’s rateable value rises, its bill could still decrease under the current system.
