As UK shoppers seek out the best deals amid the cost-of-living crisis, Britain’s leading discount supermarkets are warning of inevitable price rises following recent budget measures.
The warning comes as Which? reveals its latest monthly supermarket price comparison for October, showing significant savings at discount retailers compared to traditional supermarkets.
However, one of the cheapest supermarkets has cautioned that price increases are unavoidable due to National Insurance contribution changes and minimum wage rises announced in the recent Budget.
The warning has been echoed by over 70 major businesses, who have jointly written to Chancellor Rachel Reeves expressing serious concerns about rising costs.
According to Which?, Aldi was named as October’s cheapest supermarket, with a basket of 62 branded and own-label items costing £111.66.
Lidl followed closely behind, with prices just 41p higher at £112.07 for loyalty app users, or £112.33 without the Lidl Plus app.
Aldi was named as October’s cheapest supermarket
PA
Tesco ranked as the most affordable of the traditional supermarkets, with Clubcard holders paying £122.26 for the same basket, while non-Clubcard customers faced a higher bill of £125.09.
The price gap was most stark compared to Waitrose, which charged £142.39 for the identical shopping list – a substantial 28 per cent more than Aldi.
Ryan McDonnell, the boss of Lidl’s UK operation, warned that “inevitably there has to be some level of inflation on products” due to National Insurance contribution and minimum wage increases.
Despite reporting strong trading ahead of Christmas and attracting customers from competitors during challenging economic times, the German-owned discount chain remains concerned about rising costs.
McDonnell has called on the Government to urgently reform the business rates system, highlighting how the property-based tax creates additional costs for high street retailers compared to online competitors.
The retail industry’s concerns have been highlighted in an open letter to Reeves, signed by more than 70 businesses including major names like Aldi, Lidl, and Tesco.
The letter warns that price rises are a “certainty” due to the combined impact of budget measures, including National Insurance hikes, packaging levies, and minimum wage increases.
These changes could result in over £7billion in additional annual costs for the industry.
The business leaders stated: “We appreciate Government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this.”
They warned that the “cumulative burden” would make job losses inevitable.
Bank of England Governor Andrew Bailey has backed retailers’ warnings about potential job cuts following the Budget changes.
He said: “I think there is a risk here that the reduction in employment could be more. Yes, I think that’s a risk.”
Business leaders have proposed several measures to mitigate the impact, including a gradual implementation of the National Insurance lower earnings threshold.
They have also suggested postponing the packaging levy timeframe and reviewing business rates changes outlined in the Budget.
The group stated that adjusting implementation timings would “give businesses time to adjust and greatly mitigate their harmful effects on high streets and consumers”.