Two-thirds of British retailers will raise prices this year in response to higher employer social security costs, a survey by the British Retail Consortium (BRC) showed on Wednesday.
The new Labour government introduced the new charges in its first budget in October, announcing an April start date.
The survey of chief financial officers and finance directors at 52 major retailers also found that around half plan to reduce staff hours and headcount at their head offices and stores.
Almost one third of those surveyed said the increased costs would lead to further automation.
Over two thirds of respondents said they were “pessimistic” or “very pessimistic” about trading conditions over the coming 12 months.
Criticism
As the UK economy struggles to grow, the government’s solution is a hike in employer taxes to raise money for investment in infrastructure and public services, which has prompted criticism from the business community.
Retailers have said the increased National Insurance payments, a rise in the national minimum wage, packaging levies and higher business rates – all coming in April – would cost the sector an additional £7 billion a year.
BRC chief executive Helen Dickinson said, “The majority of retailers have little choice but to raise prices in response to these increased costs.”
Dickinson reiterated the industry’s plea for reforms to business rates to make a meaningful difference to retailers’ tax bills.
Inflation
The BRC survey – which chimed with another from the British Chamber of Commerce, published on Monday – found the finance chiefs expect shop price inflation, as measured by the BRC, to hit an average of 2.2% in the second half of 2025.
In addition to his, food inflation was forecast to hit an average of 4.2% in the second half.
Official UK data for December – published on Wednesday – reported that inflation unexpectedly fell to 2.5%.
It had hit an eight-month high of 2.6% in November.
Last week, retailers including Tesco, Sainsburys and Marks & Spencer reported robust Christmas trading but flagged concerns about rising costs, the strength of the economy, and the consumer in 2025.
Read More: UK Inflation Unexpectedly Falls To 2.5% In December
