High Street retailers could be forced to increase prices, bosses warn

High Street bosses have furiously told the government an ‘avalanche of costs’ after the Budget will force them to increase prices.

On a call with business minister Jonathan Reynolds, chiefs of some of Britain’s best known retailers and pub chains warned tax hikes would hit expansion and hiring plans.

Their industries have been whacked with increases to employer national insurance, business rates, the National Living Wage.

B&Q owner Kingfisher, Morrisons, and Burger King were among those on the call, as well as pub chains Fullers and Greene King.

Morrisons chief executive Rami Baitieh told Reynolds that Labour’s first Budget had exacerbated ‘an avalanche of costs’, according to Sky News.

Pub chain Fullers, which employs around 5,000 people, warned it may have to halve its annual investment from £60m to £30m.

Reeves has said businesses must ‘make a choice’ to absorb increases ‘through lower profits or perhaps through lower wage growth.’

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But industry figures say firms will ‘inevitably’ be left with no choice but to pass the impact on to customers.

Helen Dickinson, chief executive at the British Retail Consortium (BRC), which represents brands including Marks & Spencer and Tesco, said: ‘Retailers will do all they can to protect their customers from higher prices. However, with retail and its supply chains all running on wafter-thin margins, it will be very difficult to entirely absorb the billions of pounds in additional costs imposed by the Government at the Budget.’

James Lowman, boss of the Association of Convenience Stores, which represents around 50,000 shops, told also The Mail price rises were a ‘last resort’ but ‘there will certainly be some retailers forced to take difficult decisions about how to make ends meet next year.’

The BRC estimates shops will be whacked with more than £5bn in new costs while UKHospitality’s forecast for pubs and restaurants is around £3bn.

As well as higher taxes, employers face a headache of costlier red tape with Labour’s workers’ rights bill.

Grocery industry experts and economists warned food prices could increase as supermarkets grapple with higher costs.

Food prices have cooled in recent months with grocers rushing to lower the prices of staple goods such as butter, meat and milk.

Inflation has finally been tamed after hitting a peak of 11.pc in October 2022 following the invasion of Ukraine in February 2020.

But Neil Saunders, from market research group Global Data, warned: ‘The Budget will end up being inflationary and hurting consumers. The government can pretend that putting a greater burden on business doesn’t impact ordinary people but, ultimately, it does. The increased costs work their way through the system.’

Economist Julian Jessop added: ‘If employers’ bills go up, they can absorb some of that in the short term in some of their margins but supermarkets are already super competitive. It’s inevitably going to be passed on. Whether that’s lower wages, higher prices or some combination of the two will depend on individual markets.’