UK retailers are calling on the Government to cut domestic business costs to help keep prices down for consumers, warning that global instability linked to the Middle East conflict is adding further pressure to already stretched supply chains.
The British Retail Consortium (BRC) said four in five people (80pc) fear the conflict will push up food prices, as energy, shipping and raw material costs rise across global markets.
Retailers have warned that while geopolitical disruption is playing a role, it is only one part of a wider cost squeeze facing the sector.
The BRC said retailers are already absorbing “significant” additional costs linked to the conflict, including higher energy and shipping prices, with knock-on effects across fertiliser production, manufacturing and logistics networks.
It warned that these pressures would inevitably feed through to higher prices on supermarket shelves in the coming months.
However, it said domestic policy costs were compounding the challenge, citing £6.5bn in additional employment costs from higher National Insurance contributions and the National Living Wage, alongside a £1.6bn packaging tax.
Retailers have urged ministers to act on what they describe as a growing burden of regulatory and policy-driven costs, including energy levies, packaging charges and planned labour market reforms.
Food retailers raised concerns at a meeting with Chancellor Rachel Reeves in early April, calling for the removal of energy policy levies, network charges and system fees, which the BRC said account for between 57pc and 65pc of a typical business electricity bill.
They also pressed for a delay to the introduction of new food reformulation rules under the updated nutrient profiling model, and a review of the packaging levy, which is expected to cost the sector more than £2bn a year.
A survey commissioned by the BRC found widespread public concern over the impact of global instability and rising domestic costs.
It found that 73pc of people expect the Middle East conflict to push up prices beyond food, while 81pc are worried about energy bills, 76pc about fuel costs and 68pc about tax rises.
Retailers warned that rising import, energy and logistics costs linked to geopolitical disruption are likely to filter through supply chains over time, adding further inflationary pressure just as households continue to grapple with higher living costs.
The sector argues that without changes to domestic cost structures, firms will struggle to absorb external shocks without passing them on to consumers.
BRC chief executive Helen Dickinson 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.”
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