The boss of Aldi has warned Rachel Reeves that higher taxes will force prices up in shops.
As the supermarket revealed sales topped £18billion in the UK and Ireland for the first time last year, Giles Hurley said the Chancellor should think ‘very, very carefully’ before doing anything that might make food more expensive.
‘We would encourage the Government to adopt policies which don’t inadvertently add to the costs of businesses in the food sector,’ he said.
‘Any policies which affect the operating costs of business should be considered very, very carefully because of the very real risk they find their way back into the food system and on to prices.’
The chief executive added that the rise in employer National Insurance Contributions and a new packaging levy have already ‘rippled through to prices on the shelf edge’.
And he believes shoppers are still ‘finding things difficult’ with ‘stubborn’ inflation leaving shoppers looking for good deals.
Cost of living crunch: Aldi boss Giles Hurley said the Chancellor should think ‘very, very carefully’ before doing anything that might make food more expensive
His comments came as trade group the Food and Drink Federation (FDF) warned that food inflation could hit 5.7 per cent by Christmas. It was 4.2 per cent in August, according to the British Retail Consortium.
Aldi, which has 1,060 stores in the UK, said it made £18.1billion in sales last year – compared to £17.9billion in 2023.
But it said profits were hit amid a fierce price war between rivals including fellow discounter Lidl and traditional heavyweights Tesco and Sainsbury’s.
Profits fell around a fifth from £552.9million to £435.5million as the discount supermarket invested in prices, infrastructure and boosting staff wages.
Aldi’s market share was 10.8 per cent last month, according to figures from data firm Worldpanel.
After sales boomed amid the cost-of-living crisis, Aldi overtook Morrisons to become the fourth-largest UK supermarket in 2022. And the gap has been narrowing with third-placed Asda, which has 11.8 per cent of the market.
Aldi said it will invest £1.6billion to step up its UK supermarket expansion – with 80 openings in the pipeline over the next two years.
Russ Mould, investment director at investment platform AJ Bell, said that rival bosses would be ‘wiping their brows’ as Aldi gets closer to its target of 1,500 UK shops.
He said: ‘That’s a significant expansion, and Tesco and its peer group will need to come up with new ways to keep their customers loyal.’
Hurley added: ‘If you ask customers, the inflationary challenges are just tremendously challenging because they come on top of bills elsewhere going up. So they’re really unwelcome.
‘We do need domestic policy which challenges that stubborn inflation that we’re seeing at the moment.’
And he said the Budget – which takes place later than usual on November 26 – had ‘no doubt’ created ‘a bit of uncertainty’ among consumers.
The industry was still waiting for the ink to dry on business rates changes, Hurley said.
Retailers have urged the Government to rule out further increases to the cost of doing business, as well as taking a second look at its reform business rates.
The sector says thousands of big shops will be forced to pay more under the Chancellor’s proposals, which could lead to more job losses and store closures.
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