Pressure At Every Level: Retailers And Growers Brace For Budget Fallout

As Chancellor Rachel Reeves readies the next Budget, major UK retailers are warning that any further tax rises or new business-rates surcharges could reignite food inflation just as consumers begin to breathe easier.

In a letter coordinated by the British Retail Consortium (BRC), supermarket groups have urged the Treasury to reconsider plans for a business-rates “surtax” on properties with a rateable value over £500,000, saying the move would risk pushing prices higher. The BRC has highlighted that large retail stores make up a small proportion of total sites but account for about a third of retail’s business-rates bill.

Under the government’s reform package, from April 2026–27 permanently lower business-rates multipliers are to apply to retail, hospitality and leisure premises under £500,000 rateable value, and the plan was to fund that by applying a higher multiplier to properties over £500,000 — which includes some supermarkets and large stores. The BRC warns that applying the higher rate to large shops could lead to up to 400 store closures and 100,000 job losses.

From the vantage of the fresh-produce supply chain, the implications are significant. While the public commentary currently centres on supermarket head offices and large-format retailers, any cost pressures imposed on those businesses are likely to ripple upstream — putting additional margin pressure on growers, wholesalers and logistics partners. The actual government announcements stop short of specifying relief measures for the primary produce sector at this stage.

Meanwhile, data from the BRC and others show that food inflation — which reached around 5.1 % in the year to September — is already elevated. The extra burden of higher business rates or tax costs therefore threatens to undo progress in stabilising grocery prices and consumers’ value perceptions.

With the Budget approaching, the Chancellor’s decisions will have real implications for all tiers of the food supply chain — retailers, suppliers and shoppers alike. The fresh sector, in particular, will be watching closely to see whether the Government offers targeted relief beyond the retailers’ head-office lens, or whether mounting cost burdens end up being passed further down the chain.