Britain’s major grocery chains have issued a caution regarding food prices. They are urging the Chancellor to exempt stores from an upcoming business rates surcharge, warning that consumers will ultimately bear the brunt through increased prices.
In a joint letter organized by the British Retail Consortium (BRC) and directed to Rachel Reeves, it is argued that shielding retailers from additional tax burdens would help combat food inflation. The letter, endorsed by top UK executives from Tesco, Sainsbury’s, Aldi, Asda, Iceland, Lidl, Marks & Spencer, Morrisons, and Waitrose, expresses concern that significant retailers could face rising business rates if included in the proposed surcharge targeting properties valued over £500,000.
The proposed measure aims to fund discounts for smaller high-street businesses set to benefit from reduced business rates under the Government’s plans. Expected to be confirmed in the upcoming autumn Budget announcement with enforcement starting in April, the scheme has raised apprehensions among supermarket leaders who claim that their capacity to absorb additional costs is dwindling.
The supermarket executives stress the potential impact of further taxes on their ability to offer value to customers, citing ongoing cost pressures and the likelihood of continued high food inflation into 2026. They highlight the disproportionate burden of business rates on large retail premises, which account for a significant share of the total retail rates bill and warn that any further increase could exacerbate food inflation.
The letter concludes by urging Ms. Reeves to address the retail sector’s tax burden imbalance, asserting that it would demonstrate strong support for the industry and the Government’s commitment to tackling food price inflation.
Helen Dickinson, the BRC’s chief executive, emphasized that supermarkets are facing immense financial strain, with over £7 billion in additional costs in 2025 alone attributed to various factors such as higher national insurance contributions and new packaging taxes.
The Treasury has been approached for comment on the matter.