The Chancellor has received a stark warning ahead of her next Budget as voters say the cost of living remains their biggest concern.
Rachel Reeves has been given a damning warning (Image: Getty)
Rachel Reeves has received a damning warning from retailers that any further tax rises on them this November will push food price inflation above 5% well into 2026. The ominous forecast comes as a new poll reveals that voters’ biggest concern remains the cost of living crisis, which Labour came to power promising to solve.
Since becoming chancellor, Rachel Reeves has lost control of inflation which is currently at 3.8% – already nearly double the Bank of England’s inflation target of 2%, which Labour inherited from the Tories. However food price inflation is already much higher, at 4.9%, the highest level since the cost of living crisis began in 2022/23. The British Retail Consortium, the body representing UK retailers, has now warned that this will rise and remain above 5% well into next year if their industry is hit by any further tax rises at the next Budget.
Food price inflation is already 2.5x the Bank of England’s target (Image: Rachel Reeves X)
Among the main concerns are some larger shops being on course to see their business rates rise if they are included in a new planned surtax for shops valued at over £500,000.
The industry has also faced additional pressure from the large rise in Employer National Insurance at the last budget, a move that broke the Chancellor’s election pledge on tax.
Helen Dickinson, Chief Executive of the BRC said the Government now risks “losing the battle against inflation, and working families are understandably worried.”
“With many people barely recovering from the last cost of living crisis, the Chancellor will want to protect households and enable retailers to continue doing everything they can to hold back prices.
“The Treasury is currently finalising its plans to support the high street, including a much-needed reduction in business rates for retail, hospitality and leisure premises.
“However, the biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties. This would effectively be robbing Peter to pay Paul, increasing costs on these businesses even further and forcing them to raise the prices paid by customers.”
Andrew Griffith MP, the Conservatives’ Shadow Business and Trade Secretary, said: “Families can’t afford for the cost of their weekly shop to keep rising.
“But that’s exactly what’s happening as Rachel Reeves hikes taxes and sends inflation soaring. Labour’s tax-and-spend doom loop is wrecking our economy and making ordinary people worse off.
“Only the Conservatives will give businesses the space they need to drive growth and improve living standards.”
A poll of 2000 Brits, conducted by Opinium on behalf of the BRC, found that 57% of Britons agree that ‘prices rising faster than wages’ is their biggest concern, higher than both tax rises (49%) and rising unemployment (26%).
A Treasury spokesman: “We know that for many cost of living pressures are very real and that’s why the Chancellor is determined to bring inflation down and support people who are facing higher bills.
“We have made a start and are creating a fairer business rates system to protect the high street, support investment, and level the playing field through our Plan for Change. We are also introducing permanently lower tax rates for retail, hospitality, and leisure properties from April. Unlike the current relief for these properties, there will be no cash cap on the new lower tax rates, and we have set out our long-term plans to address ‘cliff edges’ in the system to support small businesses to expand.”
