Who’s accountable for meals worth hikes – supermarkets or Rachel Reeves?

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Your assist makes all of the distinction. Learn extra W hatever occurred to the grocery store worth struggle? The most recent inflation figures confirmed no indicators of it. Meals costs are surging. They recorded an unsightly 4.4 per cent rise over the yr to Might, the sharpest improve in additional than a yr. That compares to the earlier month’s 3.4 per cent bounce. Keep in mind, these rises are cumulative.

It will come as a bitter blow, significantly to low-income households for whom meals takes up a disproportionate chunk of the family finances. It additionally raises a query: have been the supermarkets pulling a quick one on us with all their speak about pumping cash into reducing their costs a number of brief months in the past? Was the supposed worth struggle simply smoke and mirrors? Or is that this all the way down to Rachel “We gained’t elevate taxes on working folks” Reeves?

After I spoke to one of many large supermarkets, they insisted that this isn’t on them, pointing to Metropolis forecasts, which clearly present that the large gamers are going to make much less cash this yr than they did final yr.

“That is all the way down to a mix of elevated taxes, elevated wages and the elevated costs supermarkets are having to pay suppliers,” my supply mentioned, pointing to the sharply elevated wholesale worth of beef for example of the latter. “We're competing laborious, however price inflation has to cross by means of a minimum of partially.”

A specific sore level with retailers is the federal government’s packaging levy, which it prefers to name the “prolonged producer accountability” (EPR) tax. Attempt saying that rapidly thrice. This shifts accountability for the price of family recycling from native authorities to the businesses that use the packaging.

Conceptually, it could seem to make sense beneath the precept that the polluter pays, nevertheless it comes at a worth: the British Retail Consortium places the annual price to retailers at as a lot as £2bn a yr.

It doesn’t matter how environment friendly your grocer is, or how aggressively they cut back the prices they will minimize; that quantity is just too large for them to soak up. The supermarkets level to the bounce in meals worth inflation because the outcome.

The latter isn’t simply on the EPP. There's additionally Reeves’ choice to boost employer NICs, which is equally out of the grocers’ management and also will have an effect on costs. Keep in mind that the choice hit companies that make use of massive numbers of individuals on comparatively low wages the toughest due to the decreased threshold at which the tax kicks in. Supermarkets have been proper within the firing line.

<img src="https://static.independent.co.uk/2025/04/16/11/19/GettyImages-2194023506.jpeg" srcset="https://static.independent.co.uk/2025/04/16/11/19/GettyImages-2194023506.jpeg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2025/04/16/11/19/GettyImages-2194023506.jpeg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="‘It doesn’t matter how efficient your grocer is, or how aggressively they reduce the costs they can cut; that number is simply too big for them to absorb’" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

‘It doesn’t matter how environment friendly your grocer is, or how aggressively they cut back the prices they will minimize; that quantity is just too large for them to soak up’ (Getty Photographs) As I’ve written beforehand, this features as a stealth tax on working folks. And so, arguably, does the EPR, with the poorest and most susceptible folks hit hardest. The chancellor ought to actually cease making an attempt to fake in any other case and have a strategic rethink. You may’t maintain banging on about how vital “working folks” are to you while you’re continually kicking them within the guts.

With oil costs rising and the continued disruption to produce chains brought on by crises equivalent to Russia’s struggle in Ukraine and hostilities between Israel and Iran, meals costs look more likely to proceed rising. An excellent harvest can be good. However that’s not one thing we are able to financial institution on.

As for the larger image, headline inflation in Might by way of the Client Value Index (CPI) got here in at 3.4 per cent. There was a sure absurdity in the best way the ONS reported the numbers. “The Client Costs Index (CPI) rose by 3.4 per cent within the 12 months to Might 2025, in contrast with 3.5 per cent within the 12 months to April,” it declared. Besides, this isn't true as a result of, as we all know, the nationwide stats physique received its sums fallacious final month and admitted that the precise quantity was 3.4 per cent. It simply determined to not appropriate it.

Statements like that, which successfully say black is white, do nothing to revive public confidence in officialdom and authorities statistics. The choice to not appropriate was taken in order to not disrupt a bevvy of contracts linked to CPI. Nicely, okay, however the ONS ought to acknowledge the error in its statements.

As for the folks counting on this dodgy knowledge to set rates of interest – by which I imply the Financial institution of England’s Financial Coverage Committee (MPC) – don’t get your hopes up. The Metropolis at the moment places the possibility of a minimize on the newest assembly at simply 10 per cent, and even that appears excessive to me.

This doesn’t imply the MPC’s assembly is inconsequential. Removed from it. First, watch the vote. On the final assembly, the bulk (5) opted for no change, however two MPC members known as for a minimize, whereas one other two argued for an increase. Any change in these numbers will have an effect. Folks searching for mortgages, beware. If the MPC turns hawkish on charges, it is going to transfer the curiosity swaps market, which governs the value lenders pay to finance fixed-rate mortgages. The worth of those may head greater even when the Financial institution holds regular.

The MPC’s minutes will even be intently watched, significantly for its view on the upheaval wrought by the Israel-Iran battle, and the influence it's having on oil costs. The worth on the pumps is already rising.