UK chief executive urges government to tread carefully as retailers face mounting pressures from tax and regulation
Aldi has cautioned that food prices could climb further if the forthcoming Budget imposes additional costs on employers.
Giles Hurley, chief executive of Aldi UK, said measures such as last year’s National Insurance rise and the introduction of new packaging rules had already filtered through to supermarket shelves.
“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 onto prices,” Mr Hurley told the BBC.
The warning comes ahead of the 26 November Budget, where more than 60 retailers have urged Chancellor Rachel Reeves to avoid further tax increases on a sector already grappling with tight margins.
Aldi reported annual sales edging up to £18.1bn, though pre-tax profits fell by more than 20% to £435.5m, reflecting investment in price cuts, infrastructure and higher wages. The supermarket has committed more than £300m this year alone to shielding customers from rising costs, Mr Hurley said.
Even so, inflation continues to bite. The price of a 500g pack of lean beef mince, for example, has risen from £3.79 at the start of the year to more than £5 at major supermarkets. “Cattle prices are up 30% this year and herd sizes are dropping,” Mr Hurley noted, highlighting wider global commodity pressures as well as domestic policy impacts.
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UK food inflation stood at 4.9% in July, compared with 3.9% across the EU, according to Eurostat. The Food and Drink Federation has warned that new packaging rules, due to come into force next month, will add an estimated £1.1bn in costs for the sector. It forecasts food inflation could peak at 5.7% by the end of 2025 and remain above 3% into 2026.
Mr Hurley argued that greater certainty and support for British farmers is needed to strengthen domestic production and ease long-term pressures. “Ultimately, a resilient British food sector is utterly dependent on having a resilient British farm sector,” he said.
Despite the squeeze, Aldi is continuing with its UK expansion, operating 1,060 stores and planning a further 80 outlets over the next two years backed by a £1.6bn investment programme.
