Blow for shoppers as fruit & veg prices to SOAR after Budget tax raid – with two supermarkets issuing stark warning
FRUIT and veg prices are set to soar following the Budget tax raid – in a huge blow for shoppers.
Two supermarkets, Sainsbury’s and Tesco, have been forced to issue statements acknowledging the predicted hike.
At her first Budget in October, Rachel Reeves introduced tax rises amounting to £40 billion – including raising the rate of employer National Insurance contributions.
This, alongside increasing minimum wage, could raise the cost of growing fruit and vegetables by 10 to 12 per cent, the British Growers Association (BGA) has warned.
Suppliers will be unlikely to be able to absorb the increase themselves, due to the new National Insurance changes.
And the same is true of supermarkets – who will likely be forced pass on at least some of the burden to their customers, it is believed.
Both suppliers and supermarkets have already been hit by rising energy prices and increased fertiliser bills over a period of years.
Sainsbury’s, which previously warned that the Budget would cost them an extra £140 million, has admitted it is feeling the pinch.
CEO Simon Roberts said on Friday that the chain would need to work with its suppliers to minimise the impact on customers.
He told The Grocer: “Suppliers have got costs coming at them as well, of course, given all of the changes in National Insurance coming.
“We’ll be working really closely to make sure that between us, we find the best answers we can and we continue to give customers the best value that we possibly can.”
It is not the first supermarket to acknowledge the difficult times ahead – with Tesco boss Ken Murphy also promising to protect customers against the looming economic challenges, a sentiment also echoed by M&S CEO Stuart Machin.
The BGA has said it thinks retailers should shoulder the majority of the increased fruit and veg costs, as growers have already had to put off investment for too long due to low returns.
And suppliers and supermarkets are already reportedly rowing over the additional costs.
The UK’s largest chicken supplier is attempting to pass on the full cost increase to its supermarkets, amounting to at least £30 million extra per year, according to the Sunday Times.
Food inflation peaked at 19.2% in March 2023 but has since fallen to around 1.9%. This means the rate of price increases has fallen rather than that food is getting cheaper.
While come groceries are cheaper than this time last year – such as pasta, rice, flour, chicken, frozen fish, cheese and yoghurts – most items are still increasing in price, just by smaller amounts than before.
The Bank of England has forecast that it expects food prices to only rise by 1.1% throughout 2025.
However, many experts believe this estimation to be optimistic – with pub chain Wetherspoons warning that food and drink prices will have to rise.
The British Retail Consortium has predicted that food price inflation could reach 4.2 per cent by the end of the year.
How to save on your supermarket shop
THERE are plenty of ways to save on your grocery shop.
You can look out for yellow or red stickers on products, which show when they’ve been reduced.
If the food is fresh, you’ll have to eat it quickly or freeze it for another time.
Making a list should also save you money, as you’ll be less likely to make any rash purchases when you get to the supermarket.
Going own brand can be one easy way to save hundreds of pounds a year on your food bills too.
This means ditching “finest” or “luxury” products and instead going for “own” or value” type of lines.
Plenty of supermarkets run wonky veg and fruit schemes where you can get cheap prices if they’re misshapen or imperfect.
For example, Lidl runs its Waste Not scheme, offering boxes of 5kg of fruit and vegetables for just £1.50.
If you’re on a low income and a parent, you may be able to get up to £442 a year in Healthy Start vouchers to use at the supermarket too.
Plus, many councils offer supermarket vouchers as part of the Household Support Fund.