Sainsbury’s is facing a “barrage of costs” that will force it to raise prices, its chief executive has warned, as the retailer revealed a £140m hit from Rachel Reeves’s National Insurance tax raid.
Simon Roberts said “difficult decisions” would have to be made after the Chancellor’s Budget triggered a steep rise in costs.
It comes after Ms Reeves last week moved to increase employers’ National Insurance (NI) by 1.2 percentage points to 15pc from next April and lower the threshold at which companies start paying it.
Retailers also face higher labour costs from April 2025 onwards after the Government increased the national minimum wage from £11.44 an hour to £12.21.
Mr Roberts also issued a separate warning over the threat to Britain’s food security following the Chancellor’s inheritance tax raid on farmers.
He said: “British farmers work incredibly hard to make sure they can provide food that everyone wants to buy.
“I would urge the Government to work closely with farmers to make sure they listen to their concerns because we need a resilient, successful, productive food system so that we’re producing what we need here.”
It follows warnings that Ms Reeves’s overhaul of death duties, which will end the practice of letting all farmers pass on estates without inheritance tax, will hit three-quarters of all British-grown produce.
This has sparked fears that many farmers could be pushed out of the industry, hurting Britain’s ability to source domestic produce.
The Sainsbury’s chief said the Government must address such concerns to avoid relying on “cheaper imports”.
Mr Roberts added that it was “pretty difficult to disagree” with the Office for Budget Responsibility’s assessment that the extra burden placed on retailers from the Budget would feed into inflation.
He said: “It’s pretty clear it’s going to come pretty fast. Given the margins of the industry, there just isn’t the capacity to absorb this level of unexpected cost inflation that is coming at us as fast as it is.
“We will do everything we can to mitigate the impact of this. But this barrage of costs coming at us is significant.”