Major retailers warn tax rises could drive up food prices

27th October 2025

Tesco, Sainsbury’s, Asda and Morrisons have warned that potential increases in business rates could push food prices higher for millions of UK consumers, urging the chancellor to reconsider ahead of the forthcoming autumn budget.

The retailers, which represent the bulk of the UK grocery market, said that new tax measures targeting large stores would undermine efforts to keep prices stable and threaten investment in the sector.

The country’s biggest supermarket chains have written collectively to Chancellor Rachel Reeves to express concern over proposals to raise revenue through higher business rates or a windfall-style surcharge on major retailers.

The letter, coordinated by the British Retail Consortium (BRC), warns that any such move would “inevitably” translate into increased costs for consumers, coming at a time when households are only beginning to recover from sustained inflationary pressures.

“If the industry faces higher taxes in the coming budget – such as being included in the new surtax on business rates – our ability to deliver value for our customers will become even more challenging, and it will be households who inevitably feel the impact,” the retailers said in the letter.

“Given the costs currently falling on the industry, including from the last budget, high food inflation is likely to persist into 2026. This is not something that we would want to see prolonged by any measure in the budget.”

The retailers also argued that food prices remain highly sensitive to operational costs, which have already been elevated by energy bills, wage rises, and supply chain disruptions.

They said supermarkets have absorbed much of the inflationary burden in recent years, narrowing profit margins to maintain affordability for customers. Further taxation, they said, would limit the ability of retailers to invest in store improvements, new technology, and job creation.

The BRC’s intervention reflects growing industry unease about fiscal policy direction under the new government, with retail leaders warning that the sector is “at a tipping point.

The letter urges the Treasury to focus instead on measures that support business investment, productivity, and long-term competitiveness within the UK retail market.

The list of retail executives that signed the letter is: