Rachel Reeves tax bombshell means higher prices for shoppers and high street closures

Shoppers face higher prices at supermarket checkouts because of Rachel Reeves’ tax rises, top shops have warned.

Seven out of ten chain stores say they will be forced to charge more because of the Chancellor’s decision to increase National Insurance.

The warning comes from the British Retail Consortium, which represents household names including Sainsbury’s, Tesco, Morrisons and Aldi.

Food prices in particular are expected to rise, with an increase of 4.2 percent expected in the second half of this year.

There are also warnings of more boarded-up premises in high streets as smaller shops are forced to close entirely, while some retail staff will find their hours are cut.

Helen Dickinson, Chief Executive at the British Retail Consortium, 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.”

She added: “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.

“The majority of retailers have little choice but to raise prices in response to these increased costs, and food inflation is expected to rise steadily over the year. Local communities may find themselves with sparser high streets and fewer retail jobs available.”

Retailers have been hit by a triple whammy with National Insurance increases announced in Ms Reeves’ first Budget as Chancellor costing £2.33 billion. A new tax on packaging will cost them £2.73 billion while increasing the minimum wage will cost £2.00 billion, handing retailers a burden of £7.06 billion together.

The Chancellor is under pressure after the value of Sterling fell and the yield on government bonds rose, pushing up the cost of Government borrowing and stoking speculation about future spending cuts. Ms Reeves insisted in the House of Commons that this was a result of global factors but industry leaders say Government decisions have added to the problems by threatening economic growth at home.

The survey of chief financial officers of British Retail Consortium members found 67 percent plan to raise prices and 56 percent said they will reduce staff hours or offer less overtime.

In addition, 52 percent said they would cut staff in head offices and 46 percent plan to cut the number working in stores.

Shareholders including pension funds will share the pain with four in ten saying they expect to report lower profits.

Defending herself in Parliament, Ms Reeves insisted: “The economic headwinds that we face are a reminder that we should, indeed we must go further and faster in our plan to kickstart economic growth that plunged under the last government.

“By bringing stability to the public finances after years of instability under the party opposite, unlocking investment that plummeted under the previous government and pushing ahead with the essential reforms to our economy and public services.”