The chief executives of Britain’s largest supermarkets have issued a stark warning that proposed tax increases could drive food prices even higher, calling on Chancellor Rachel Reeves to exclude the industry from additional fiscal burdens in the forthcoming Budget.
In a united front, leaders from Tesco, Sainsbury’s, Asda, Morrisons, Lidl, Aldi, Waitrose, and Marks & Spencer signed a letter to the Chancellor, coordinated by the British Retail Consortium. They highlighted that large retail premises, though few in number, bear a disproportionate share of business rates, and any further tax hikes would inevitably be passed on to consumers.
The letter specifically addresses the government’s plan to introduce a surtax on properties with rateable values exceeding £500,000, which would affect many supermarket stores. Supermarkets argue that this could push food inflation higher, as they struggle with already elevated costs from previous budgets, including higher National Insurance contributions.
Food inflation has been a persistent issue, with official data showing price increases of up to 19% for items like butter and over 12% for milk. The supermarkets warn that without relief, high food inflation is likely to extend into 2026, worsened by global challenges such as disease-affected harvests and trade disputes.
The British Retail Consortium’s chief executive, Helen Dickinson, stated that retailers are fighting an “uphill battle” with over £7 billion in additional costs in 2025 alone. She emphasized that addressing the tax burden would signal government support for curbing inflation, a key priority for the Treasury.
Chancellor Reeves is grappling with a £22 billion shortfall in public finances, according to the Institute for Fiscal Studies, making tax rises probable. However, supermarkets point to their efforts to maintain affordability, noting that Tesco, for instance, faced a £235 million hit from NI increases, while Lidl reported a tripling of profits.
The Budget, scheduled for late November, will reveal the government’s stance. Supermarkets urge that changes to business rates result in a significant reduction of their burden, arguing that this would help stabilize prices and support households amid ongoing cost-of-living crises.