BOSSES of major retailers including Asda, Primark, Sainsbury’s and M&S have issued an urgent price rise warning.
Shoppers have been told to expect price increases after Chancellor Rachel Reeves announced a hike in employers’ National Insurance costs in last week’s Budget.
Retailers have said the tax raid will cost them millions of pounds and mean they have to look at cutting costs and rising prices.
Asda chairman Stuart Rose said the increase would cost the supermarket giant £100million, and inevitably lead to price increases at the checkout.
He explained: “You cannot absorb £100milion of cost. We don’t have a magic money tree in Leeds.”
The price rise warning followed that by Sainsbury’s chief executive Simon Roberts, who said the supermarket “just didn’t have the capacity to absorb this level of unexpected cost inflation”.
Mr Roberts predicted the National Insurance hike would cost the business £140million and added that it would “feed through into higher inflation”.
Wetherspoon boss Tim Martin said the pub giant would aim to remain competitive on pricing, but would see its tax bill rise by two-thirds next year.
Martin said: “Cost inflation, which had surged to high levels in 2022, gradually diminished over the subsequent two years.
“However, it has now significantly increased again following the Budget.
“All hospitality businesses, we believe, plan to increase prices, as a result.
“Wetherspoon will, as always, make every attempt to stay as competitive as possible.”
The pub giant predicted tax and business costs would increase by approximately £60million over the next year, including an estimated 67% rise in National Insurance contributions.
Wetherspoon’s warning on prices comes as M&S chief executive Stuart Machin also cautioned it was looking at a £120millin hit.
The retailer, which had reported a 20% increase in half-year profits, also said it would do “everything we can” to avoid passing on the extra burden to customers through price hikes.
The chief executive of Primark’s parent company Associated British Foods, George Weston, said he felt “the weight of tax rises” in the Budget was falling on the UK high street.
He said the company’s National Insurance bill would rise by “tens of millions” of pounds, but it would try to “hold prices”.
While Weston said Primark would not immediately look to price increases, he added that the increase in costs would prevent it from cutting prices as quickly as it would have hoped.
In the Budget, Rachel Reeves hiked the employer rate of National Insurance from 13.8% to 15%.
She also announced a reduction to the threshold at which businesses start paying NI contributions from £9,100 to £5,000.
It’s estimated that the move will raise £25billion – the equivalent of around £800 per employee for each firm.
Businesses were quick to warn that the increased financial burden would lead to higher operating costs, which may ultimately be passed on to consumers through price rises.
In the aftermath of the Budget Reeves also conceded that hard-working employees will be affected by their bosses playing more National Insurance.
What is the UK’s cheapest supermarket?
WE’RE all looking for ways to save on our supermarket shops. But which store should you go to if you’re on a strict budget?
According to Which?, who compare thousands of prices at the top eight UK supermarkets – Aldi, Asda, Lidl, Morrisons, Ocado, Sainsbury’s, Tesco and Waitrose – every month, there’s one place that outweighs the rest in terms of being budget-friendly.
In April 2024, Aldi was at the top of the list, with Which? comparing 67 popular groceries costing an average of £112.90.
Lidl isn’t far behind, at £115.23, followed by Asda in third place with a bill of £126.98.
Tesco was next, at £128.17, while Sainsbury’s rounded out the top five with £131.02.
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