The British Retail Consortium (BRC) has cautioned about predicted inflation rises
The cost of food is set to be six per cent higher by the end of the year compared with the year before, posing a “significant challenge” ahead of Christmas. Retailers have warned about rising costs and potential layoffs if the Chancellor increases taxes in the upcoming budget, with two-thirds of finance directors expecting additional price increases, the British Retail Consortium (BRC) revealed.
A worrying 56 per cent of retail finance chiefs – representing more than 9,000 shops – have expressed ‘pessimistic’ views regarding business outlook for the next year, BRC research indicates. The consortium counts major UK grocers such as Tesco and Sainsbury’s among its members.
An alarming 85 per cent have admitted to raising prices due to the last budget’s hikes in employer’s National Insurance and the National Living Wage, while 65 per cent anticipate additional increases on the horizon.
With current food inflation figures at four per cent, the BRC has forecasted a jump to six per cent above the previous year’s levels by the festive season, warning: “This will pose significant challenges to household budgets, particularly in the run-up to Christmas.”
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Amid soaring prices, 42 per cent of finance directors have put a stop to hiring, and 38 per cent have reduced in-store staff numbers. This trend is reflected in the latest employment figures, with nearly 100,000 fewer retail jobs in the first quarter of 2025 compared to the previous year, as reported by the BRC, reports Glasgow Live.
Additionally, more than a third of Chief Financial Officers (38 per cent) have cut back on community investments, and 15 per cent have postponed new store openings. BRC chief executive Helen Dickinson said: “Retail was squarely in the firing line of the last budget, with the industry hit by £7 billion in new costs and taxes. Retailers have done everything they can to shield their customers from higher costs, but given their slim margins and the rising cost of employing staff, price rises were inevitable.
“The consequences are now being felt by households as many struggle to cope with the rising cost of their weekly shop. It is up to the Chancellor to decide whether to fan the flames of inflation, or to support the everyday economy by backing the high street and the local jobs they provide.”
Earlier in January, the BRC had forecasted a 4.2 per cent increase in food prices during the second half of the year, as retailers grapple with heightened expenses stemming from the budget.
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At that time, Ms Dickinson remarked that projections by the trade association and industry leaders indicated there was ‘little hope of prices going anywhere but up’ as retailers were hit with increased National Insurance (NI), National Living Wage, and new packaging costs.
Just last week, market research firm Worldpanel by Numerator, previously known as Kantar, revealed that UK grocery prices had soared at their sharpest rate in 18 months, sparking worry among consumers about the escalating cost of living.
Grocery price inflation jumped to 5.2 per cent in the four weeks leading up to July 13, a rise from 4.7 per cent the previous month, hitting the highest point since January 2024. The figures suggest that shoppers could see an average increase of £275 in their annual grocery bills due to the climbing prices.
Sainsbury’s and Tesco have been contacted for their thoughts. A HM Treasury spokesperson also said: “We are a far cry from the double-digit inflation we saw in the last few years.
“But we know that people are still struggling with high bills, which is why we are determined to put more money into people’s pockets, and already, we expanded free school meals to over half a million more children, we’re rolling out free breakfast clubs in every primary school and we have boosted the national living and minimum wage.
“As part of the Plan for Change we are reforming business rates to level the playing field, have capped corporation tax for the duration of parliament and have taken 865,000 small businesses out of paying employer National Insurance through increasing the Employment Allowance.”
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