London, (Shahzad Ali) __ Leading supermarket chains in the UK have issued a cautionary statement regarding the prospect of escalating food prices should the government proceed with proposed hikes in business taxes for the retail sector.

A coalition of chief executives from major retailers, including Tesco, Asda, Sainsbury’s, Morrisons, Lidl, Aldi, Iceland, Waitrose, and Marks & Spencer, jointly addressed Chancellor Rachel Reeves in a letter advocating for a reconsideration of tax increases anticipated in the upcoming Autumn Budget. They emphasized that elevated business rates would “inevitably be passed on to ordinary households,” noting that the retail sector is already grappling with significant financial burdens.

In reaction, the Treasury reiterated its commitment to controlling food prices, labeling it a “top priority” for the government. The Treasury highlighted previously implemented reductions in business rates aimed at small traders, such as butchers and bakers. Nevertheless, supermarket executives countered that additional tax burdens would exacerbate challenges in maintaining price affordability within the sector. The letter stated, “The industry is still bearing the heavy burden of last year’s budget measures,” warning that “if new taxes are imposed, food inflation could persist into 2026.”

Budgetary Pressures Intensify for Reeves
As the Autumn Budget approaches next month, speculation is mounting regarding Chancellor Reeves’s potential introduction of new taxes or spending reductions in light of weakened economic forecasts and escalating borrowing requirements.

In last November’s budget, Reeves introduced £40 billion in additional tax initiatives, primarily through raised employer National Insurance contributions, and pledged against further tax increases. However, the Institute for Fiscal Studies (IFS) has since estimated a £22 billion fiscal shortfall, indicating that additional tax increases are “almost inevitable.” Key factors contributing to this fiscal pressure include rising interest payments on public debt, stagnant economic growth, and commitments for new spending following the spring announcements.

Impact of Rising Food Prices on Consumers
Data from the Office for National Statistics (ONS) indicates a continued rise in everyday grocery prices, adding strain on household finances. Specifically, butter prices have surged by 19%, and milk prices have increased by over 12%, while chocolate and coffee have risen by approximately 15%.

Industry analysts attribute these price hikes to a confluence of global factors, including adverse weather impacting harvests, trade tensions, and supply chain disruptions, alongside domestic challenges such as increased business rates and higher minimum wage mandates.

Helen Dickinson, Chief Executive of the British Retail Consortium, remarked that retailers are “doing everything possible to keep food prices reasonable,” yet described the process as “an uphill battle.” She further noted that tax-related changes have imposed an additional £7 billion cost burden on the sector this year.

Tesco CEO Ken Murphy has voiced strong concerns over the ongoing tax climate, stating that higher National Insurance contributions alone have resulted in a £235 million cost for the company this year. Despite these financial pressures, Tesco has adjusted its annual profit forecast upwards to a range of £2.9 billion to £3.1 billion. In contrast, Lidl reported a notable threefold profit increase, with sales climbing by 7.9% to £156.8 million for the financial year ending February 28, 2025.

Chancellor Confronts Complex Balancing Act
Chancellor Reeves has indicated that her forthcoming budget will introduce “targeted measures to address the cost-of-living crisis,” although she has not dismissed the possibility of raising income tax. This ambiguity has spurred speculation that the Labour government may revise its electoral commitment not to increase taxes on working families.

Economic analysts caution that further tax increases could adversely affect consumers and jeopardize recent advancements in curbing inflation.