Price rises loom as Budget hits Sainsbury’s with £140m costs
Sainsbury’s chief executive Simon Roberts has cautioned that new government measures will hit shoppers with higher prices by adding £140m to the supermarket’s costs.
These include a National Insurance hike, and a rise in the UK minimum wage.
The increased National Insurance contributions, as announced by Chancellor Rachel Reeves in her Autumn Budget, will surge from 13.8 per cent, to 15 per cent, on earnings above £175.
“The impact on National Insurance was unexpected and is coming fast”, Roberts said.
“It will have a very significant impact on our cost base… and our supplier’s cost base”, he continued.
While the rise of minimum wage wasn’t priced, Mr Roberts acknowledged the impact it would also have on overall prices.
For staff, Roberts said that it was “too early to be specific” about his workforce.
Yet, the tax hikes and minimum wage will undoubtedly squeeze profit for the leading supermarket chain.
With operating margins of just three per cent, Roberts stressed that Sainsbury’s “just doesn’t have the capacity to absorb this barrage of costs”.
“When you think about the £140m in our business”, he continued, “I don’t think you can shy away from the fact that it is going to beat through into higher inflation”.
Roberts acknowledged concerns echoed by the office for Budget responsibility.
With pressures mounting, he claimed: “we’ll do everything we can to mitigate this, but given the margins of the industry, there’s a lot of pressure in the pipe already”.