Iceland, M&S, Morrisons and Waitrose have also sent out the message
Britain’s leading supermarkets have sent out a food prices warning. Their bosses are pressing the Chancellor to spare shops from a proposed business rates surtax, cautioning that consumers will ultimately foot the bill through higher prices.
A letter coordinated by the British Retail Consortium (BRC) and addressed to Rachel Reeves contends that shielding grocers from additional tax burdens would help combat food inflation. It has signatures from UK bosses and senior figures at Tesco, Sainsbury’s, Aldi, Asda, Iceland, Lidl, Marks & Spencer, Morrisons and Waitrose.
The BRC has expressed alarm that major retailers could face escalating business rates if they fall within the Government’s proposed surtax targeting properties valued above £500,000.
This measure is designed to fund discounts for smaller high-street businesses, which would benefit from reduced business rates under the Government’s proposals. The scheme is anticipated to receive confirmation in next month’s autumn Budget announcement and would take effect from April.
In the letter, the supermarket bosses say that their ‘ability to absorb additional costs is diminishing’. It reads: “If the industry faces higher taxes in the coming Budget – such as being included in the new surtax on business rates – our ability to deliver value for our customers will become even more challenging and it will be households who inevitably feel the impact.
“Given the costs currently falling on the industry, including from the last budget, high food inflation is likely to persist into 2026. This is not something that we would want to see prolonged by any measure in the Budget.
“Large retail premises are a tiny proportion of all stores, yet account for a third of retail’s total business rates bill meaning another significant rise could push food inflation even higher.”
The letter concludes by urging Ms Reeves to ‘address retail’s disproportionate tax burden’ which it claimed would ‘send a strong signal of support for the industry and of the Government’s commitment to tackling food inflation’.
Helen Dickinson, the BRC’s chief executive, said: “Supermarkets are doing everything possible to keep food prices affordable, but it’s an uphill battle, with over £7 billion in additional costs in 2025 alone.
“From higher national insurance contributions to new packaging taxes, the financial strain on the industry is immense.”
The Treasury has been contacted for comment.
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