Food Prices will Rise Due to Budget Tax Hikes, Retail Body Warns

By Evans Momodu
2 minute digest


Food price inflation is set to intensify in the coming months, with shoppers facing an average increase of 4.2% in grocery costs during the latter half of 2025, according to industry estimates from the British Retail Consortium (BRC).

The rise reflects the impact of budgetary measures introduced by Chancellor Rachel Reeves in October, which have been criticised by businesses as detrimental to investment, jobs, and wages.

These price hikes will add to the burden on households already grappling with significant increases in water, energy, and council tax bills.

Key Points:

• Tesco warned of a £250 million annual cost increase due to higher employer National Insurance contributions. Despite maintaining its profit forecast, Tesco's shares fell by 2%.
• Marks & Spencer (M&S) reported strong food sales growth of 8.9% but saw its shares drop by 6%—the sharpest intraday decline in nearly two years.
• Greggs shares plummeted by over 9%, citing a "challenging market backdrop" and weak consumer confidence.

The broader UK currency and bond markets have also been in turmoil, with concerns over public finances contributing to a weaker pound and higher gilt yields.

These financial pressures, compounded by rising food costs, are squeezing household budgets further, creating a difficult environment for both consumers and businesses.
Source: Sky news