The bosses of major supermarkets, including Tesco, Asda, and Sainsbury’s, have warned Rachel Reeves that further tax rises will hit customers the hardest. In a letter signed by Britain’s biggest grocers, including Morrisons, Lidl, Aldi, Iceland, Waitrose and M&S, bosses warned food prices will rise even further if tax hikes are on the agenda in November’s Budget.
They claimed that delivering value will become “even more challenging” if the Chancellor announces tax increases, including business rates, on November 26, and warned that British households will “inevitably feel the impact”. It continued: “Given the costs currently falling on the industry, including from the last Budget, high food inflation is likely to persist into 2026. This is not something that we would want to see prolonged by any measure in the Budget.”
While the inflation rate has slowed on food, the price is still increasing, and the cost of many food staples has spiked. The inflation rate for food and non-alcoholic drinks was down to 4.5% for the year to September, from 5.1% in the year to August.
Food inflation has surged due to higher taxes, an increase in the minimum wage and higher national insurance contributions, which have been compounded by poor harvests globally and escalating trade tensions.
Helen Dickinson, chief executive of the British Retail Consortium, which represents the UK’s major supermarkets, said there was more than £7billion in additional costs in 2025 alone, citing higher taxes.
She said it was an “uphill battle” to keep prices affordable, but retailers were “doing everything possible”, reports the BBC.
Bosses highlighted major concerns over a proposed business rates reform, or the surtax, which impacts large commercial premises.
In last year’s Budget, the government announced a higher rate would apply to properties with rateable values at and above £500,000, which the government says will include the majority of large distribution warehouses.
The Chancellor is expected to confirm rates in next month’s Budget, which will come into effect in April 2026.
However, supermarkets said large retail premises were a “tiny proportion of all stores, yet account for a third of retail’s total business rates”. They called for the proposed changes to result in a “significant reduction to the industry’s rates burden”.
With food inflation “stubbornly high”, Ms Dickinson said ensuring the retail rates burden doesn’t rise further would be “one of the simplest ways to help”.
The Treasury said tackling food price inflation was a “priority” and said it was lowering business rates for “butchers, bakers and other shops”.
The Treasury said that business rates would be adjusted to reflect changes in the overall value of the tax base, so the system continues to raise the same amount of revenue in real terms.
