Supermarket Bosses Warn Higher Taxes Could Fuel Further Food Price Rises

The heads of the UK’s largest supermarkets have cautioned Chancellor Rachel Reeves that increased taxation on the sector could lead to even higher food prices for consumers.

Tesco, Asda, Sainsbury’s, Morrisons, Lidl, Aldi, Iceland, Waitrose, and Marks & Spencer jointly signed a letter to the Chancellor ahead of next month’s Autumn Budget, expressing concerns about potential tax increases such as higher business rates. They warned that households would “inevitably feel the impact” of any such changes, particularly as the cost of living remains a significant concern for many families. The letter highlighted that costs falling on the industry, including those from the previous Budget, suggest high food inflation is likely to persist into 2026.

Supermarket leaders argue that large retail premises represent a disproportionately high share of the total business rates burden. Helen Dickinson, chief executive of the British Retail Consortium, stated that retailers are “doing everything possible to keep food prices affordable,” but are facing over £7 billion in additional costs in 2025 alone. The Office for National Statistics recently reported price spikes in staples like butter (up 19%) and milk (over 12%), adding to the pressure on household budgets – you can find more data on inflation rates here.

The Treasury stated that tackling food price inflation is a “priority” and that it is lowering business rates for smaller shops. However, economists at the Institute for Fiscal Studies have identified a £22 billion shortfall in public finances, suggesting further tax increases are almost certain. The Chancellor is expected to announce her plans on 2025-10-25, with the changes set to take effect in April 2026; understanding business rates is crucial to understanding the potential impact.

Officials have indicated they are planning “targeted action to deal with cost of living challenges” but have not ruled out raising income tax.