Reeves tax raid sends prices rising at the fastest pace for more than a year

Prices in Britain’s shops are rising at the fastest pace for more than a year as retailers pass on the cost of higher taxes to consumers.

In just the latest sign of the damage inflicted by Rachel Reeves’ first Budget, the British Retail Consortium (BRC) said average prices are now 0.9 per cent higher than a year ago.

This was the sharpest increase since March last year and was driven by a 4.2 per cent surge in food prices as the rising cost of essentials hits families.

Industry experts blamed the Chancellor’s £25billion hike in national insurance paid by employers and an inflation-busting rise in the minimum wage which has made it more expensive to employ staff.

And they warned a ‘perfect storm of costs’ is costing jobs in the sector – fuelling fears of a ‘lost generation’ as young workers are particularly hard hit.

Official figures last week showed inflation across the economy has soared to an 18-month high of 3.8 per cent as businesses pushed up prices to deal with the extra costs inflicted by Reeves.

Tax raid: Businesses have pushed up prices to deal with the extra costs inflicted by Chancellor Rachel Reeves (pictured)

There are fears of another tax raid this autumn as the Chancellor struggles to make her Budget numbers add up.

The bosses of firms such as Tesco, Sainsbury’s, John Lewis, Boots and Currys wrote to Reeves last week to warn her against further tax hikes on business. 

The industry estimates that measures in the Budget, including the rise in national insurance, have cost it £7billion.

Helen Dickinson, boss of the BRC, said: ‘Retailers continue doing everything they can to limit price rises for households, but the £7billion in new costs flowing through from last year’s Budget has created an uphill battle.’ 

Mike Watkins at research group NIQ, which compiled the report with the BRC, said: ‘As shoppers return from their summer holidays, many may need to reassess household budgets in response to rising bills.’

The Retail Jobs Alliance, which represents a coalition of chains including Marks & Spencer, Primark and B&Q owner Kingfisher, has warned that up to 300,000 retail jobs could go by 2028 including 40,000 held by workers aged between 16 and 24.

A spokesman said: ‘With the perfect storm of costs facing these larger stores, and the wider UK retail sector, there is a danger that opportunities for young people could be lost. 

‘We urge the Government to protect our larger bricks-and-mortar stores, to prevent shutting off these opportunities and creating a lost generation.’