"Last week, the Bank of England held off from an interest rate cut on fears that rising food prices were putting upwards pressure on headline inflation. The last Budget added £7 billion to retailers costs as a result of rises to employer NICs, higher NLW and a new packaging tax, so it was no surprise that the latest MPC minutes blamed rising food prices on "labour costs and costs associated with new packaging regulation" as well as higher commodity prices."
"The BRC is warning 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. The Government has pledged to bring down business rates for retail, hospitality and leisure premises, but around 4,000 large shops could actually see their rates rise, if they are included in the Government's new business rates surtax for properties with a rateable value over £500,000."
A poll of 2,000 people found 57% agreed prices are rising faster than wages, rising to 61% among working respondents. Concerns about price rises outstripped worries about tax increases (49%) and unemployment (26%). Headline inflation is 3.8%, nearly double the Bank of England's 2% target, and food inflation hit 5.1%, the highest since 2022/23. Retail price inflation accelerated after the previous Budget raised employment costs and introduced a packaging tax, adding about £7 billion to retailers' costs. The MPC linked rising food prices to labour, packaging regulation and commodity costs, and the BRC warns food inflation could remain above 5% into 2026 if further tax rises occur.
Read at London Business News | Londonlovesbusiness.com
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