Aldi warns Chancellor tax rises could push up food prices as sales top £18bn
Discounter says recent cost increases have already fed through to shelf prices as profits fall amid a widening price war
Aldi UK has warned Chancellor Rachel Reeves that proposed tax increases could raise food prices, saying policies that increase business operating costs risk being passed on to shoppers.
Giles Hurley, Aldi UK chief executive, told the BBC that measures such as higher employer National Insurance contributions and a new packaging levy have already "rippled through to prices on the shelf edge," and urged policymakers to weigh the impact on the food system ahead of the 26 November Budget.
Aldi reported sales of £18.1 billion in the UK and Ireland for the most recent year, up from £17.9 billion in 2023, but said profits fell as the retailer invested in lower prices, infrastructure and higher staff wages. Pre-tax profits declined to £435.5 million from £552.9 million the prior year, the company said.
Hurley said shoppers are still "finding things difficult" and described Aldi's strategy as a commitment to "everyday low prices" without loyalty clubs or promotions. He added that any policies affecting business costs "should be considered very, very carefully because of the very real risk they find their way... back into the food system and onto prices."
The squeeze on margins comes amid an intense price war across the supermarket sector, with competition from other discounters such as Lidl and larger chains including Tesco and Sainsbury's. Data firm Kantar/Worldpanel figures published last month put Aldi's UK market share at 10.8 percent.
Trade bodies have joined retailers in warning of upward pressure on food prices. The Food and Drink Federation said food inflation could reach 5.7 percent by the end of December, while the British Retail Consortium reported food inflation of 4.2 percent in August.
Aldi said the decline in profits reflected deliberate decisions to hold down shelf prices for customers while investing in its store network and staff. The retailer highlighted wage increases for employees and continued price investment as factors that reduced near-term profitability.
Chancellor Reeves is scheduled to deliver the autumn Budget on 26 November. Business groups and several large firms have publicly cautioned that further tax measures or levies that increase operating costs could be transmitted through supply chains and contribute to higher consumer prices.
Industry analysts note that supermarkets face competing pressures: cost increases for wages, packaging and energy on one hand, and intense competition to keep prices low on the other. Aldi's expansion in market share and sales growth reflect a sustained shift by some consumers toward lower-cost grocery options amid a prolonged period of above-target inflation.
Aldi's comments add to a broader policy debate about how to balance fiscal objectives with managing inflation and protecting household living standards. The company reiterated that its approach is designed to offer "quality products at unbeatable prices" while managing the commercial impacts of rising costs.