Aldi boss issues chilling warning to Rachel Reeves ahead of Budget – ‘very real risk’ | Personal Finance | Finance
British households could be hit with another surge in food prices if Chancellor Rachel Reeves’s upcoming Budget adds fresh costs for retailers, the boss of Aldi has warned.
Giles Hurley, chief executive at Aldi UK, said that recent Government policies, including last year’s National Insurance hike and extra costs linked to new packaging rules, had already fed into the cost of everyday shopping. Additional measures could make matters worse. He told the BBC: “Any policies which affect the operating costs of business should be considered very, very carefully because of the very real risk they find their way back… into the food system and onto prices.”
It comes as consumers continue to feel the pinch from stubbornly high inflation. The price of staples has risen sharply over the past year, driven by a combination of global factors and domestic policy changes. For example, a 500g pack of lean beef mince has jumped from £3.79 at the start of the year to over £5 in most major UK supermarkets.
Analysts say the UK is experiencing more persistent inflation than much of Europe, with food price growth at 4.9% in July compared to 3.9% across the EU.
The Food and Drink Federation (FDF) has warned that new packaging rules alone could add an extra £1.1billion in costs onto the sector from next month. Combined with rising wages and higher National Insurance contributions, it expects food inflation to reach 5.7% by the end of the year.
More than 60 retailers have written to the Chancellor ahead of the November 26 Budget, urging her to resist new revenue-raising measures targeting the already-strained industry.
Mr Hurley said: “If you speak to customers across the country, they’ll tell you that inflation is persistent and urgent. Action is needed.”
It comes as Aldi reported that annual sales edged up to £18.1billion but profits fell by more than a fifth to £435.5million.
The bargain supermarket giant attributed the figures to investment in price cuts, infrastructure and higher pay.
Mr Hurley stressed that long-term stability will depend on strengthening Britain’s farming base, arguing that a healthy domestic agricultural sector could help bring down prices and reduce reliance on global markets.
He said: “Ultimately, a resilient British food sector is utterly dependent on having a resilient British farm sector.”
The Treasury has insisted the Budget will focus on “building an economy that works for working people”, pledging to cut inflation while “keeping a tight grip on public spending”.
However, the Chancellor has been warned that if she presses ahead with plans for a new surtax on properties with a rateable value above £500,000, hundreds of shops will be forced to close. The plans were announced in last year’s Budget and are set to be determined on November 26.
The British Retail Consortium (BRC) said as many as 400 large-format stores could shutter as a result, which will have a knock-on effect on the wider high street.
BRC chief executive Helen Dickinson said: “Britain’s largest shops are magnets, pulling people into high streets, shopping centres, and retail parks and supporting thousands of surrounding cafes, restaurants, and smaller and independent shops.
“After years of rising costs, far too many stores have disappeared – leaving behind empty shells that once thrived at the heart of our communities. Four hundred more large stores could disappear if the Government forces them into its new higher tax band. This would mean up to 100,000 jobs lost, emptier high streets, and less revenue for the Exchequer.”
The BRC urged the Chancellor to act in the Autumn Budget, warning: “Without simply shifting the cost onto larger stores – which would be massively damaging to our high streets”.
