UK Supermarkets Warn Tax Rises Could Push Food Prices Higher

Britain’s top supermarkets have warned that higher taxes could push food prices even higher. Retailers including Tesco, Asda, Sainsbury’s, Morrisons, Aldi, Lidl, Iceland, Waitrose, and M&S signed a joint letter to Chancellor Rachel Reeves ahead of next month’s Budget.
They said households would “inevitably feel the impact” if the government imposes additional taxes, such as higher business rates. The Treasury, however, stated that tackling food inflation remains a priority and noted it has lowered business rates for smaller shops like butchers and bakeries.

Retailers Raise Concerns

In their letter, supermarket bosses said further tax increases would make it harder to keep prices low. They warned that if costs continue to rise, food inflation may persist into 2026.
“Given the existing pressures on the sector, higher taxes would harm affordability for families,” they said. Retailers urged the Chancellor not to prolong price pressures through new fiscal measures.
Speculation is growing that Reeves will raise taxes in the upcoming Autumn Budget, following weak economic forecasts and rising borrowing costs. Economists at the Institute for Fiscal Studies (IFS) predict a £22 billion shortfall in public finances, suggesting tax rises are almost certain.
Meanwhile, everyday items such as butter, milk, chocolate, and coffee continue to cost more, according to the Office for National Statistics. Poor harvests, droughts, and trade tensions have all contributed to global food price surges.

Calls for Fairer Business Rates

Supermarket leaders say current business rate reforms are unfair to large retailers. The new “business rates surtax” will apply to properties valued above £500,000 including distribution centers and warehouses.
According to Helen Dickinson, Chief Executive of the British Retail Consortium, the sector faces over £7 billion in extra costs in 2025. “It’s an uphill battle,” she said, urging the government to ease the tax burden.
Supermarkets argue that large retail stores make up a small share of total outlets but shoulder nearly a third of all rates. They want the Chancellor to ensure reforms don’t increase pressure on food retailers.
A Treasury spokesperson responded that adjustments would reflect property values so that overall revenue stays balanced. However, businesses remain cautious, fearing that the UK supermarkets tax warning may soon become a reality for consumers at checkout counters.