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Aldi’s CEO has raised concerns that any moves in the Budget that increase costs for businesses could result in higher food prices for consumers. Giles Hurley, the chief executive of Aldi UK, pointed out that the impact of last year’s National Insurance hike and the expenses associated with new packaging regulations had already translated into higher prices on supermarket shelves. He emphasized that policies affecting business operating costs should be carefully evaluated to prevent these costs from ultimately being passed on to customers.
The Budget, set to take place on November 26th, has been a topic of discussion among more than 60 retailers who have reached out to Chancellor Rachel Reeves to urge against imposing additional taxes on the industry. Large chains are particularly concerned about business rates, with fears that planned reforms could result in the closure of hundreds of stores. Aldi itself reported a slight increase in annual sales to £18.1bn, though profits fell by over a fifth to £435.5m due to investments in price reductions, infrastructure, and higher wages.
Moreover, Aldi has invested over £300m this year to mitigate the impact of rising costs and keep prices competitive. Despite these efforts, staple product prices at supermarkets have notably risen this year. For example, the price of a 500g pack of lean beef mince has soared from £3.79 at the start of the year to over £5 at major chains. Global factors, such as increasing commodity prices, have contributed to food inflation, with UK food inflation hitting 4.9% in July compared to 3.9% in the EU according to Eurostat figures.
The Food and Drink Federation predicts that food inflation could reach 5.7% by the end of December and continue at 3.1% through 2026. The rise in the minimum wage and higher National Insurance Contributions for employers, along with new packaging regulations, are driving factors behind food inflation. Mr. Hurley stressed the importance of supporting farmers to boost domestic food production, which could positively impact inflation rates. Additionally, Aldi is planning further expansion, with intentions to open 80 more stores over the next two years supported by a £1.6bn investment
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