Measures announced in the budget will cost one of the UK’s biggest supermarket chains £140m, its chief executive said.
The rise in employer’s national insurance contributions, announced by Chancellor Rachel Reeves in her budget last week, will cost Sainsbury’s £140m from April, CEO Simon Roberts said.
No price was put on the rise of the national minimum wage but Mr Roberts said the new measures would cause inflation – the rate of overall price rises – to go up.
The supermarket chain, the UK’s second-largest by market share, does not have the “capacity to absorb” a “barrage of costs”, Mr Roberts said so customers will have to pay more.
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He pointed to analysis from independent forecaster the Office for Budget Responsibility (OBR) which said Ms Reeves’s announcements would cause inflation to be higher than originally predicted, saying it was “difficult to disagree with”.
Mr Roberts said: “This impact on national insurance was unexpected and is coming in fast, it will have a very significant impact, it will impact our costs base… and our suppliers’ cost base.”
When asked to quantify the inflationary effect of minimum wage rises and upped national insurance contributions Mr Roberts said inflation was already on the up, there’s “a lot of pressure in the pipeline….there’s pressure in the system in inflation already”.
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What had been expected, Mr Roberts said, was a reduction in business rates: “Business rates will go up this year I certainly didn’t expect them to go up next year I expected them to go down”.
What does it mean for staff?
When asked what the impact could be on the Sainsbury’s workforce Mr Roberts said the company had “difficult decisions to take as a result” but it was “too early to be specific”.
Earlier this week JD Wetherspoon, which owns more than 1,000 pubs across the UK, said the budget will add £60m in costs next year, while M&S expects to take a £120m hit.
Changing habits
Also announced by Sainsbury’s on Thursday morning was the return of the “big weekly shop” as people are going back to the office.
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As a result of higher restaurant prices people are also eating at home more, Mr Roberts added.