UK supermarket bosses have warned Chancellor Rachel Reeves that further tax increases in the forthcoming Budget would put upward pressure on prices, “inevitably impacting” already squeezed British households.

The open letter, organised by the British Retail Consortium (BRC), was signed by nine of the UK’s largest supermarkets, including Morrisons’ CEO Rami Baitieh, Sainsbury’s CEO Simon Roberts and Tesco’s Group CEO Ken Murphy.

It warned that further tax hikes would make their “ability to deliver value” to customers “even more challenging,” and urged the Chancellor to exclude shops from the proposed business rates surtax.

“If the industry faces higher taxes in the coming Budget – such as being included in the new surtax on business rates – our ability to deliver value for our customers will become even more challenging and it will be households who inevitably feel the impact.“

The letter argued that retailers had already been hit by significant rising costs from the last Budget, including increases to National Insurance Contributions (NICs), National Living Wage (NLW) rises, changes to business rates relief and new packaging taxes.

It also highlighted the key role played by UK supermarkets in job creation, supporting local economies and communities, as well as ensuring households could access low priced groceries and essentials.

“We compete fiercely and work tirelessly to keep prices down and support communities through our significant investment in jobs and High Streets. We exist at the centre of communities, supporting local suppliers and charities, driving footfall to surrounding businesses and providing flexible jobs.“

The letter warned that, while supermarkets are continuously seeking efficiencies, their ability to absorb additional costs is “diminishing,” which could translate into higher prices at the tills for shoppers.

Commenting on the letter, Helen Dickinson, Chief Exec of the BRC, said that “supermarkets are doing everything possible to keep food prices affordable – but it’s an uphill battle.”

Pointing to the £7billion+ in additional costs it estimates retailers face in 2025, she added “the financial strain on the industry is immense.”

“Large retail stores sustain nearly one million British jobs and already contribute a third of all retail’s business rates, despite being a tiny proportion of all stores. [Exempting] shops from the new business rates surtax would not only help to tackle food inflation but would support jobs and investment right across the country.”

Helen Dickinson, CEO, BRC

“The Chancellor has rightly made tackling inflation her top priority, and with food inflation stubbornly high, ensuring retail’s rates burden doesn’t rise further would be one of the simplest ways to help,” Dickinson added.

“This would not cost the taxpayer a penny, with large office blocks and industrial plants, for whom business rates is a smaller proportion of their costs, paying a little more,” she concluded.