67% leading UK retailers feel budget to force price hike: BRC

Sentiment languished at a concerning minus 57, with 70 per cent of respondents being ‘pessimistic’ or ‘very pessimistic’ about trading conditions over the coming 12 months, while just 13 per cent said they were ‘optimistic’ or ‘very optimistic’. Seventeen per cent were neither optimistic nor pessimistic.

When asked how they would be responding to the increases in employers’ National Insurance Contributions(NICs) from April 2025, 67 per cent stated they would raise prices, while around half said they would be reducing number of hours/overtime (56 per cent), head office headcount (52 per cent) and stores headcount (46 per cent). Almost a third said the increased costs would lead to further automation.

The impact of the Budget on wider business investment was also clear, with 46 per cent of CFOs saying they would reduce capital expenditure and 25 per cent saying they would delay new store openings. Forty-four per cent of respondents expected reduced profits, which will further limit the capacity for investment, a BRC release said.

This survey comes a few weeks after 81 chief executive officers in the retail sector wrote to the finance minister raising concerns over the economic consequences of the Budget.

The letter noted that the retail industry’s costs could rise by over £7 billion this year as a result of changes to employers’ NICs, National Living Wage increases and the reformed packaging levy.

Weak consumer confidence and low consumer demand are also issues. The CFOs forecast that shop price inflation, currently at 0.5 per cent, will rise to an average of 2.2 per cent in the second half of 2025.

While sales growth is expected to improve this year on the 2024 level of just 0.7 per cent, at just 1.2 per cent this would still be below inflation. This means the industry could be facing a year of falling sales volumes at the same time as huge new costs resulting from the Budget.

ALCHEMPro News Desk (DS)