Nine of Britain’s biggest supermarkets have warned Rachel Reeves against forcing up the price of food by hiking business rates on large premises. Senior figures from the likes of Asda, Lidl, Tesco and Waitrose have written to the Chancellor to sound the alarm about the dangers of food inflation.
They warn that households will “feel the impact” if supermarkets are forced to pay higher taxes and warn that “high food inflation is likely to persist into 2026”. The bosses write: “This is not something that we would want to see prolonged by any measure in the Budget. Large retail premises are a tiny proportion of all stores, yet account for a third of retail’s total business rates bill, meaning another significant rise could push food inflation even higher.”
The Government plans to introduce higher business rates for properties with rateable values of more than £500,000 – a prospect that has dismayed the British Retail Consortium.
Chief executive Helen Dickinson said: “Supermarkets are doing everything possible to keep food prices affordable, but it’s an uphill battle, with over £7billion in additional costs in 2025 alone. From higher National Insurance contributions to new packaging taxes, the financial strain on the industry is immense.
“Large retail stores sustain nearly one million British jobs and already contribute a third of all retail’s business rates, despite being a tiny proportion of all stores. This letter calls on the Chancellor to exempt shops from the new business rates surtax – levied on all large commercial premises. This would not only help to tackle food inflation but would support jobs and investment right across the country.”
The signatories to the letter – who include top figures from Aldi, Iceland, Marks & Spencer and Sainsbury’s – warn: “The IMF estimates that the UK will have the highest inflation in the G7 in 2025 and 2026. This matters to millions of ordinary people who are struggling with the cost of living, and it will continue to matter until food inflation can be brought to heel.”
They claim that six out of 10 UK households have seen a drop in their weekly disposable income and warn that their “ability to absorb additional costs is diminishing”.
Shadow Chancellor Sir Mel Stride said: “This letter from Britain’s biggest supermarkets is yet another warning that Rachel Reeves’s tax rises are fuelling inflation and driving up the cost of living for families. When even supermarkets – fighting to keep prices down for millions – are saying the Chancellor’s decisions are pushing costs higher, it’s clear Labour has lost control.
“Inflation is still almost double the Bank of England’s target, food prices remain stubbornly high, and Rachel Reeves’ answer is to raise taxes again. Under Labour business rates have gone up for retailers – a Conservative government would lift thousands of shops out of business rates altogether.”
A Treasury spokesperson said: “Tackling food inflation is a priority, which is why we’re boosting incomes through increasing the National Living Wage, lowering business rates for butchers, bakers and other shops, and sticking to our fiscal rules to bring inflation down.”
The Government argues its deal with the EU will help make food cheaper and states that food inflation decreased from 5.1% in August to 4.5% in September in the first fall since March.
