Shoppers could face higher prices as a growing number of major UK businesses warn of the cost of National Insurance (NI) tax rises for employers announced in last week's Budget .
Sainsbury's and Marks & Spencer have hinted at a price rise, while pub chain Wetherspoons said “all hospitality businesses” would increase prices due to the tax changes.
Separately, the owner of Primark said on Tuesday that it could invest more abroad due to the “burden of tax rises”.
Chancellor Rachel Reeves told the BBC on Sunday that the changes to NI were needed “to put our public finances back on solid footing”.
From next April, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently.
The change is expected to raise £20 billion a year, making it one of the biggest tax rise measures in history.
Sainsbury's chief executive Simon Roberts said on Thursday the changes in NI would cost the company around £140m, a sum which does not include increases to the minimum wage.
“I don't think you can ignore the fact that because of changes in everyone's cost base, that's going to feed through into higher inflation,” he said.
“We will do everything we can to mitigate the impact, as you have seen over the last four years, to really improve our pricing position.
“But this avalanche of costs on us is significant and we are an industry, a very efficient and extremely competitive industry, and we just don't have the capacity to absorb all of that.”
His comments come after Marks & Spencer chief executive Stuart Machin said on Wednesday the supermarket could not rule out a price rise following the budget.
Mr Machin said he “didn’t really see the double whammy coming”, referring to both the increase in NI for employers and the reduction in the application threshold.
When asked directly if this would lead to higher prices, he said: “I can't rule anything out because we are in the early stages of our planning.”
He estimated the NI change and minimum wage increases would cost the business £120 million.
Also on Wednesday, Wetherspoons said that as a result of the Budget, taxes and business costs were expected to “increase by around £60 million… including an estimated 67% increase in national insurance contributions” .
Chairman Tim Martin added: “We believe all hotel companies plan to increase their prices accordingly. Wetherspoon will, as always, do everything possible to remain as competitive as possible.”
Meanwhile, Associated British Foods, owner of Primark, said on Tuesday it may invest beyond the UK due to the “burden of tax rises”.
“We are also an international company, we have a choice in where we invest,” said chief executive George Weston.
This weekend the Chancellor was asked if she was rethinking the NI increase for employers.
“I'm not immune to their criticism,” Reeves said Sunday on the Laura Kuenssberg show, “but we need to raise the funds necessary to put our public finances back on solid footing.”
Reeves was criticized for her repeated assertion that the budget would not include tax increases on “working people.”
The Office for Budget Responsibility has calculated that three quarters of the impact of the NI changes will be felt by employees, with bosses curbing pay rises and hiring in the face of higher wage bills.
At a select committee hearing Tuesday. Professor David Miles of the OBR said it was “highly plausible” that it would disproportionately affect lower-paid workers.
