Iceland links food price rises to Reeves’ budget measures
In accounts signed off in July, Iceland forecast that UK food price inflation would peak at between 4% and 5% within six months
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Iceland has warned that food prices will rise as suppliers pass on higher costs linked to last autumn’s budget measures, The Telegraph has reported.
The supermarket said the increase in employers’ National Insurance contributions and the National Living Wage was pushing up its suppliers’ labour costs, which in turn were raising input prices.
Iceland told The Telegraph: “We are doing our utmost to offset the growing input cost pressures caused by suppliers seeking to recover the increase in their own labour costs arising from last autumn’s budget, but will inevitably have to pass some of these on to consumers, where we can do so without weakening our own price position in the marketplace.”
In accounts signed off in July, Iceland forecast that UK food price inflation would peak at between 4% and 5% within six months.
Meanwhile, the Bank of England has also predicted further rises in grocery costs for the rest of the year, with overall inflation expected to hit 4% in September.
Officials have cited the minimum wage increase, the Chancellor’s tax changes and a net zero packaging levy as factors driving higher prices.
The comments come months after Iceland’s chairman Richard Walker – who backed Labour after switching from the Conservatives in January 2024 – urged grocery chiefs to stop “wallowing” and “complaining” about measures in Rachel Reeves’ Budget, saying in December: “It was a tough Budget, but we adapt.”
Credit rating agency Fitch has raised concerns about Iceland’s profitability, saying it faces “momentary profit pressure” as it balances cost increases with investment in price cuts. The company employs more than 30,000 staff.
