All the retailers warning of price hikes after Budget tax raid including Greggs and Toby Carvery owner
A NUMBER of huge retailers, including Greggs, have warned that prices may rise as a result of Labour’s Budget tax raid.
In the Autumn Statement, Chancellor Rachel Reeves announced an increase in National Insurance contributions (NICs) and the National Living Wage.
Employers currently pay NICs for most workers earning more than £9,100 a year.
The sum they pay is the equivalent of 13.8% of the employee’s earnings above that threshold.
For an employee earning £30,000, for example, the employer would pay NICs of £2,884.20.
But in the Budget, the government announced it would increase the tax rate to 15% and reduce the threshold at which firms must pay to £5,000.
It’s estimated that the move will raise £25billion – the equivalent of around £800 per employee for each firm.
At the same time, the minimum wage will rise to £12.21 an hour next year, and the minimum wage for people aged 18-20 will rise to £10 an hour, an increase of £1.40.
The move has sparked fury from a raft of businesses who have warned the tax increase for businesses could lead shoppers to pay more at the till.
More than 70 businesses, including Tesco, Asda and Sainsbury’s, have told Rachel Reeves in an open letter that the changes announced in last month’s Budget mean price hikes are a “certainty”.
The changes come into effect next April.
So far, retailers including Greggs, Toby Carvery owner Mitchells and Butler and Wetherspoon have all warned of price rises.
Here, we have listed all the retailers warning of price rises following Labour’s Budget tax raid.
Greggs
Roisin Currie, chief executive at Greggs, said the measures rolled out in the Autumn Statement would put pressure on prices, though is likely to be only “pennies”.
On average Greggs customers spend £4 at its stores and this is forecast to rise marginally.
It comes despite Currie promising there were “no plans” for further price increases this year after bumping the price of its sausage roll in July,
Over the summer, Greggs confirmed the price of its much-loved pastry snack and its vegan alternative had risen by 5p to £1.25.
At the time, she said the move was necessary after experiencing a rise in costs from having to pay a higher national living wage for its 32,000-strong workforce.
Mitchells & Butlers (M&B)
All Bar One owner Mitchells & Butlers (M&B) told The Sun the price of pints could rise by between 10p and 15p.
The group, which also owns brands including Toby Carvery, said higher wage expenses are “by far the most significant increase” in its cost base following moves announced in last month’s Budget.
Chief executive Phil Urban said M&B is facing around £23million a year in extra costs from the rise in national insurance contributions alone, with the increase in the minimum wage also sending its wage bill surging.
In total, its costs will rise by around 5%, or £100million, in 2024-25.
Mr Urban said the group’s prices would likely increase as part of efforts to mitigate the extra expenses.
How to save money at the supermarket
FOR shoppers, the prospect of rising prices can feel daunting, especially with the ongoing cost of living crisis.
Senior Consumer Reporter Olivia Marshall shares five ways you can save on your weekly shop and lessen the impact of rising prices.
Sure, here are five ways people can save money on their supermarket shop:
Create a Shopping List
Plan your meals for the week and make a shopping list of all the items you need.
Stick to this list to avoid impulse buys and unnecessary spending.
Use Coupons and Loyalty Programs
Take advantage of coupons, discount codes, and loyalty programs offered by supermarkets.
These can provide significant savings on your total bill.
Buy in Bulk
Purchase items in larger quantities, especially non-perishable goods and household essentials, when they are on sale.
Bulk buying often reduces the cost per unit and can lead to substantial savings over time.
Shop Seasonal and Local Produce
Buy fruits and vegetables that are in season and locally sourced.
They are often cheaper and fresher than out-of-season produce, which has higher transportation costs.
Compare Prices and Shop Around
Don’t be afraid to visit different supermarkets to compare prices.
Some stores may have better deals on certain items, and taking the time to shop around can lead to considerable savings.
Halfords
Halfords has warned that it may need to push up prices at its repair garages.
The retailer has more than 12,000 employees so the Budget changes will send its wage bill soaring by around £23million.
It said only around £9million of the extra costs were already included in its plans for 2025-26 and mitigated.
As a result it may need to “pass through” the higher cost of wages to customers across its garages.
The group said it would be difficult to reduce the impact of a one year cost increase of this size.
But Graham Stapleton, chief executive of Halfords, said that the retailer will “work hard to mitigate these costs”.
He added: “The cost implications from the recent UK Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers, face to face.”
Royal Mail
Royal Mail has warned that stamp prices could rise again after the Budget hit.
The boss of the postal service said hiking fees — just a month after the latest rise — was a possibility as it faces an enormous burden of extra costs.
Martin Seidenberg, chief exec of International Distribution Services, said: “We are looking at all measures including pricing, parcel cost efficiencies, investment plans, auto- mation and our parcel network.
“I cannot rule out [increasing stamp prices] but we will look at not just consumer letters but also business mail and parcels.”
The cost of a first class stamps went up by 30p to £1.65 last month, while second class stayed at 85p.
Wetherspoons
Wetherspoons boss Tim Martin has also warned of price rises.
The pub chairman said it would aim to stay competitive on customer costs but that all hospitality businesses faced the same pressures.
The chain’s tax bill is expected to rise by two-thirds next year after the Chancellor announced a hike in the national insurance for employers.
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.”
Wetherspoons anticipates that tax and business costs will increase by approximately £60million over the next year, including an estimated 67% rise in national insurance contributions.
Sainsbury’s
Simon Roberts, chief executive of Sainsbury’s, said the National Insurance hike would cost it £140million and warned that shoppers will face higher food prices.
Mr Roberts said: “It will lead to inflation and it’s pretty clear it’s going to come pretty fast.
“Given the low margins of the industry, there isn’t the capacity to absorb this level of unexpected cost inflation.”
AO World
The boss of online electricals retailer AO World has warned about price rises to offset more than £8 million in extra wage costs.
AO World estimates its wage bill will go up by around £4million due to the increase in NICs and about another £4million with next April’s minimum wage rise.
Founder and chief executive John Roberts said the group is likely to have to raise prices and make savings to mitigate the impact.
He confirmed “some of it will go into prices” but said it is too early to say by how much.
He stressed that the group would also look to use growth and efficiencies to counter the blow.
“This whole Budget is extremely inflationary for retailers,” he said.
“Is anyone naive enough to think that will not follow into pricing?”
“From our point of view, it’s not about cost savings and taking headcount out; it’s about how we drive efficiencies and grow as a business.”
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