Two thirds of British retailers will raise prices this year in response to higher employer social security costs introduced in the new Labour government's first budget, a survey of finance chiefs showed on Wednesday.
Trade body the British Retail Consortium (BRC) said its survey of chief financial officers and finance directors at 52 major retailers also found that around half plan to reduce staff hours and headcount at their head offices and stores.
Almost one third said the increased costs would lead to further automation.
Over two thirds of respondents were “pessimistic” or “very pessimistic” about trading conditions over the coming 12 months.
"The majority of retailers have little choice but to raise prices in response to these increased costs," BRC Chief Executive Helen Dickinson said, reiterating the industry's plea for reforms to business rates to make a meaningful difference to retailers’ tax bills.
The BRC survey, which chimed with another from the British Chambers of Commerce published on Monday, found the finance chiefs expect shop price inflation, as measured by the BRC, to hit an average of 2.2% in the second half of 2025. Food inflation was forecast to hit an average of 4.2% in the second half.
Last week, retailers including Next (NXT.L), Tesco (TSCO.L), Sainsbury's (SBRY.L) and M&S (MKS.L) reported robust Christmas trading but flagged concerns about rising costs, the strength of the economy and the consumer in 2025.
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