The British Retail Consortium (BRC) has called on the government to take action over rising costs, as its research shows that 80 per cent of consumers are worried the conflict in the Middle East will push up the price of food.

A survey by the retail organisation found that 73 per cent of shoppers are worried about price rises on other goods.

The BRC said retailers are already absorbing significant additional costs from the conflict. Rising gas and electricity prices are pushing up production, shipping, and distribution costs throughout the supply chain, with knock-on effects for fertiliser, manufacturing and logistics.

While retailers will do everything they can to mitigate impacts on customers, the BRC said, these pressures will inevitably have knock on effects to the prices of goods over the coming months.

However, the BRC stressed, global factors are only part of the challenge. Over the past two years, retailers have absorbed £6.5 billion in additional employment costs, driven by increases to employer National Insurance contributions and the National Living Wage.

The BRC said this has been compounded by new packaging-related charges, including Extended Producer Responsibility (EPR), which alone is costing the sector £1.6 billion.

Further regulatory changes are also on the horizon, including guaranteed hours provisions under the Employment Rights Act and reforms linked to the Nutrient Profiling Model, both of which the BRC said will add additional strain to supply chains.

Unlike wholesale energy prices, which can fluctuate, these policy-driven costs remain fixed, which the BRC said will continue to impact retailers even when global markets have stabilised.

The BRC called on the government to intervene in areas within its control, setting out three key measures following a meeting between food retailers and Chancellor Rachel Reeves earlier this month.

These include removing non-commodity costs from business energy bills, delaying the rollout of the Nutrient Profiling Model, and reviewing what it describes as a “triple packaging levy” made up of overlapping charges.

Helen Dickinson, chief executive of the BRC, pointed out that other governments have already taken action. Germany reduced electricity costs for businesses by moving levies off bills and she argued similar actions by the UK government would help retailers to keep prices affordable for households.

"The UK should be moving in the same direction, not treating global instability as cover for inaction on costs of its own making,” she added. “Retailers are working hard to hold prices down, but they cannot do it alone.
“Every cost government chooses not to address is a cost that will find its way into someone's shopping basket,” Dickinson continued. “That is a political choice, and it is one ministers still have time to change – but the window to act is closing.”

Speaking at the Retail Technology Show last month, Dickinson said that the need to navigate disruption in the retail industry is “here to stay.”
She added that the geopolitical tensions in the Middle East will impact retailers for the next six months.

“Disruption is coming from every angle, whether it’s what is happening in the supply chain or what the government is doing,” Dickinson added. “It’s the complexity and the need to navigate so much rather than one individual thing.”

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