NI increase will force retailers to raise prices
The British Retail Consortium has found that retailers have significant concerns about the outlook for trading conditions over the next 12 months.
The results of a survey of chief financial officers at 52 leading retailers show that 70% of respondents said they were “pessimistic” or “very pessimistic” about trading conditions in the period, while just 13% said they were “optimistic” or very “optimistic”.
Subscribe to TRBThe top three concerns for over 60% of chief financial officers surveyed were falling demand for goods and services, inflation for goods and services, and an increasing tax and regulatory burden.
When asked how they would be responding to April’s increases in employers’ National Insurance Contributions, two-thirds stated they would raise prices, while 56% said they would be reducing the number of hours and overtime.
Meanwhile, 46% said they would reduce the number of staff working in stores and 31% said increased costs would lead to further automation.
Helen Dickinson, chief executive at the BRC, said: “With the Budget adding over £7bn to their bills in 2025, retailers are now facing into the difficult decisions about future investment, employment and pricing.
“As the largest private sector employer, employing many part-time and seasonal workers, the changes to the NI threshold have a disproportionate effect on both retailers and their supply chains, who together employ 5.7m people across the country.
“Retailers have worked hard to shield their customers from higher costs, but with slow market growth and margins already stretched thin, it is inevitable that consumers will bear some of the burden.”
Dickinson said the majority of retailers have little choice but to raise prices in response to increased costs, and that food inflation is expected to rise steadily over the year.
She added: “Local communities may find themselves with sparser high streets and fewer retail jobs available. Government can still take steps to shore up retail investment and confidence.”
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