BRC warns that government needs to act on Middle East impacts
The British Retail Consortium (BRC) has warned that cost pressures due to conflict in the Middle East will inevitably filter through to the till in the coming months.
The news comes as new polling by Opinium for the BRC shows that four in five consumers (80%) fear the conflict will push up food prices.
Subscribe to TRBThe organisation is now calling on ministers to act on “soaring domestic policy costs” to help retailers keep prices down for shoppers.
In addition, it highlighted how retailers are already absorbing significant additional costs from the conflict, including rising energy and shipping costs.
The BRC said: “While retailers will do everything they can to mitigate impacts on customers, those pressures will inevitably filter through to the till over the coming months. But the situation in the Gulf is only part of the picture.
“Over the past two years, retailers have absorbed £6.5 billion in additional employment costs from rising employer NICs and the National Living Wage, alongside a new packaging tax (EPR) costing £1.6 billion.
“Further regulatory burdens are imminent, including guaranteed hours provisions under the Employment Rights Act and the proposed reformulation of thousands of food lines under the new Nutrient Profiling Model – both due to land on a supply chain needs to focus on its resilience in the months ahead.
“Unlike wholesale energy prices, these policy costs do not ease when global markets stabilise, because they are determined by government and regulators, not by supply and demand.”
The polling also found that 81% of those surveyed were worried about rising energy bills, 76% about petrol and diesel, and 68% about tax increases.
Food retailers met with the Chancellor Rachel Reeves in early April and asked for the removal of the policy levies, network charges and system fees that now make up between 57% and 65% of a typical business electricity bill.
They also requested a delay in the implementation of the Nutrient Profiling Model and asked for review of the triple packaging levy, which is expected to cost retailers more than £2 billion each year.
Helen Dickinson, chief executive of the British Retail Consortium, said: “The Middle East conflict is driving up costs across the supply chain and families are right to be concerned.
“But not every pressure bearing down on retailers comes from the Gulf. Higher national insurance, packaging levies, new regulations, and business energy charges are all domestic policy decisions, made in Westminster, and they can be addressed there. Such action by government would help retailers to keep prices affordable for households.
“Other governments are already acting. Germany has reduced electricity costs for businesses by moving levies off bills and EU leaders are actively discussing similar responses to this crisis. The UK should be moving in the same direction, not treating global instability as cover for inaction on costs of its own making.
“Retailers are working hard to hold prices down, but they cannot do it alone. Every cost government chooses not to address is a cost that will find its way into someone’s shopping basket. That is a political choice, and it is one ministers still have time to change – but the window to act is closing.”
