Retail industry leaders have issued urgent warnings ahead of the upcoming Budget, citing rapidly rising costs that are driving prices up at their fastest rate in over two years. Figures from the British Retail Consortium (BRC) show that shop prices have increased by 2.1% year-on-year, marking the largest annual rise since early 2024.
Helen Dickinson, chief executive of the BRC, described the situation as a "dam starting to break" due to the sustained pressure of escalating costs absorbed by retailers over the past two years. She called on Chancellor John Healey to take immediate action to curb inflation by reducing employment-related expenses, halting a scheduled 3.5% increase in business rates, and removing retail stores from the high-value property surtax.
"Act now or prices will keep on rising," Dickinson warned, emphasizing that the inflation spike seen in October may only be the beginning without government intervention. The retail sector’s concerns come amid ongoing challenges including the repercussions of the conflict in the Middle East, severe weather events, and the impact of recent fiscal policies introduced under the Labour administration.
Executives from major retailers have echoed these concerns in the run-up to the Budget. Simon Roberts, chief executive of Sainsbury’s, cautioned the Chancellor against repeating the approaches of previous Budgets that impacted businesses adversely. Similarly, Stuart Machin, chief executive of Marks & Spencer, characterized past Labour Budget measures as a "disaster" for the sector and urged Healey to ease constraints on businesses.
Earlier Labour Budgets imposed unexpected increases in employer national insurance contributions and raised business rates, measures that have drawn criticism from business leaders for their effect on cost pressures. These financial burdens have coincided with inflationary trends affecting both food and non-food sectors.
Food inflation accelerated to 2.9% in the current month, up from 2.5% in September, while non-food inflation rose to 1.7%, nearing a three-year peak. Rising energy and transportation costs have contributed notably to the overall increase in prices, intensifying the strain on retailers and consumers alike.
As the Chancellor prepares to unveil his Budget, the retail industry’s calls reflect broader anxieties about the trajectory of inflation and the sustainability of cost pressures amid the evolving economic landscape.