In a letter, Britain’s retailers explain that to date, they have successfully protected customers from one of the most severe inflationary periods in recent history. However, as the pressures persist, it is increasingly challenging to absorb the associated costs.
“This year government policy has added £7 billion in new costs to retail businesses, resulting from changes to employer National Insurance, higher employment costs, and the introduction of a new packaging tax. Similar increased costs are also starting to flow through our supply chains,” states the letter.
Food prices are once again climbing. The retailers agree that the expected food price inflation is driven partly by higher global commodity prices, but point out that this was also caused by labour costs and the Extended Producer Responsibility regulations.
Food prices are once again experiencing an upward trajectory. In its recent Monetary Policy Report, the Bank of England stated that “food price inflation has also picked up by more than anticipated… and is expected to rise further”. Retailers concur that the anticipated rise in food prices is partly attributable to elevated global commodity prices. However, they also emphasise that this surge was also influenced by labour costs and the Extended Producer Responsibility regulations.
In agreement, the British Retail Consortium (BRC) expects food inflation to hit 6% later this year, driving up household bills just as winter energy costs start to kick in. With the impact being felt by communities as retail investment falls and 100,000 retail jobs have been lost over the last year alone.
Commenting, Helen Dickinson, Chief Executive, BRC, said: “Last year’s budget added £7 billion to retailers’ costs which in turn are driving up prices for ordinary families. This is why Britain’s largest retailers are writing to the Chancellor, calling for action on business rates to fix a system which sees retailers, as 5% of the economy, pay over 20% of the total rates bill. Without reform, this system will continue to cost jobs, limit investment and push up prices for households everywhere.
“The Chancellor has the opportunity at the next Budget to deliver a meaningful reduction in retail, hospitality and leisure bills, while ensuring that no shop – large or small – pays more than it presently does. This can be done at no cost to the public purse and with huge benefits to the public good. It is the moment for government to buy into retail and make a difference to millions of families up and down the country.”
The retail industry is uniquely placed to help deliver the Government’s central economic mission to deliver jobs and higher living standards, with a presence in almost every community across the UK. “We are committed to investing in our businesses and providing good quality jobs for people at all stages of their career, whether that’s someone entering the workforce for the first time, wanting flexible work to fit around their family commitments or returning to work later in life. We compete fiercely and continue to keep a laser focus on prices and value for our customers, absorbing cost pressures wherever we can,” write the retailers.
In support of the government plan to reduce business rates on Retail, Hospitality and Leisure, but they add that it is essential these changes result in a significant reduction in the industry’s tax burden. “No store should pay more as a consequence, with all shops excluded from the new higher multiplier.”
The letter ends with “As the Chief Executives of many of Britain’s leading brands, we are determined to help deliver your growth ambitions. However, for this to be possible, the conditions for stable prices, continued investment and sustainable employment must be at the heart of this year’s Budget. We see it as a key moment for the Government to publicly buy into retail and the vital role the industry can play in helping deliver a stronger and more resilient economy for all. We look forward to working with you on this important mission.”
