Responding to the latest Bank of England decision on
interest rates, and the Quarterly Monetary
Policy Report, Helen Dickinson, Chief
Executive at the British Retail Consortium, said:
“Households will have to wait a little longer for mortgage costs
to fall as the Bank of England confirmed that interest rates will
remain at 4% once again. This reflects uncertainty that inflation
is on track to fall to its target of 2%, as well as a weakening
of the labour market.
“The MPC's report once again warns that food inflation is
expected to remain elevated, in no small part due to domestic
factors including rising wage and employer NI costs and the
introduction of a new packaging tax that ‘disproportionately
affected supermarkets'. The IMF recently warned that the UK
will have the highest inflation in the G7 next year. And with
fierce competition and increasing costs leading to razor-thin
margins for the industry, retailers' ability to absorb further
costs are extremely limited.
“This is why it is vital that the Chancellor excludes retail from
the new business rates surtax at the upcoming Budget or risk
seeing food inflation stay higher longer. By protecting retailers
from further costs, the Chancellor can help protect jobs, keep
prices in check, and support investment in our high streets and
town centres.”
-ENDS-
Notes:
Page 12 of MPC report addresses pressure on food inflation:
“ Nevertheless, as discussed in Box E of the August 2025
Monetary Policy Report, domestic factors – which are likely to
affect most food components – have also contributed to recent
increases in food price inflation. Annual wage growth in the food
manufacturing sector (7%) and retail sector (6½%) remains above
aggregate wage growth, in part due to a high proportion of staff
in these sectors being paid the National Living Wage (NLW).
Recent changes to the threshold at which employers start paying
NICs are also likely to have disproportionately affected
supermarkets. In addition to labour cost increases, contacts of
the Bank's Agents suggest the introduction of Extended Producer
Responsibility regulations will continue to push up food prices
in coming months.
“Continuing pass-through of global and domestic cost
increases means that food price inflation is expected to remain
elevated over the remainder of 2025, before falling somewhat as
these pressures fade.”
