BRC warns government against further tax rises in autumn Budget

The BRC surveyed 2,000 people and found that customers’ biggest concern was “prices rising faster than wages”, with 57% of respondents agreeing – higher than concerns around tax rises (49% of respondents) and rising unemployment (26%).

It comes as inflation continues to tick up in the UK, with the latest figures from the Office for National Statistics showing that prices are up 3.8% – well ahead of the Bank of England’s 2% target.

Food inflation outstripped wider inflation – up 5.1% in August, the highest levels seen since the height of the 2022/23 cost of living crisis.

The BRC said that the Bank of England held off from an interest rate cut last week due to fears that rising food prices were putting upwards pressure on topline inflation.

Given that the last Budget “added £7bn to retailers’ costs as a result of rises to employers’ national insurance contributions, a higher national living wage, and a new packaging tax,” the BRC said it was “no surprise that the latest Monetary Policy Committee minutes blamed rising food prices on ‘labour costs and costs associated with new packaging regulation’ as well as higher commodity prices.”

The BRC warned that food inflation will rise and “remain above 5% well into 2026 if the retail industry is hit by further tax rises at the autumn Budget”, and said that while the government has pledged to bring down business rates, “around 4,000 large shops could actually see rates rise, if they are included in the government’s new business rates surtax for properties with a rateable value over £500,000”.

The retail lobbying group’s chief executive Helen Dickinson said: “The government risks losing the battle against inflation and working families are understandably worried. With many people barely recovering from the last cost of living crisis, the chancellor will want to protect households and enable retailers to continue doing everything they can to hold back prices.

“The Treasury is currently finalising its plans to support the high street, including a much-needed reduction in business rates for retail, hospitality and leisure premises. However, the biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties.

“This would effectively be robbing Peter to pay Paul, increasing costs on these businesses even further and forcing them to raise the prices paid by customers. Removing all shops from the surtax can be done without any cost to the taxpayer and would demonstrate the chancellor’s commitment to bring down inflation.”