Aldi warns tax rises could push up food prices as sales top £18bn

Aldi’s UK chief executive warned the government against raising costs for supermarkets ahead of the upcoming Budget, saying higher business taxes and levies risk translating into higher prices for shoppers.

Giles Hurley told the BBC that any policies that increase operating costs for retailers "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 comments come as Aldi reported £18.1 billion in sales in the UK and Ireland for the past year, up from £17.9 billion in 2023, but said profits fell as it invested in prices, infrastructure and staff wages.

Aldi said pre-tax profits declined to £435.5 million from £552.9 million a year earlier. The retailer attributed the drop to a fierce price war involving discounters such as Lidl and major supermarket chains including Tesco and Sainsbury’s, alongside the cost of supporting lower prices and raising employee pay. The company’s UK market share rose to 10.8 percent, according to Worldpanel data.

Hurley pointed to recent cost rises, including the increase in employer National Insurance contributions and a new packaging levy, as examples of measures that had already "rippled through to prices on the shelf edge." He said shoppers were still finding things difficult and that groceries had become a larger share of household budgets. He also said the delayed Budget — now pencilled in for Nov. 26 — had created "a bit of uncertainty" for consumers.

The Food and Drink Federation warned earlier that food inflation could hit 5.7 percent by the end of December, up from 4.2 percent in August, according to figures from the British Retail Consortium. Retail groups and trade bodies have urged ministers to rule out further increases to the cost of doing business, and to reconsider proposed changes to business rates that the sector says could push up costs for large shops and risk job losses and closures.

Aldi said it remained focused on offering low prices and quality to customers, characterising its approach as simple and consistent: everyday low prices without loyalty clubs or promotional gimmicks. The retailer added that many consumers had shifted spending patterns during the cost-of-living squeeze, with some opting to buy premium dine-at-home meals rather than eating out.

Industry observers say supermarkets face a complex mix of pressures, including competition-driven price moves, input-cost volatility, wage and operational cost increases, and evolving consumer behaviour. Retailers have been balancing margin protection with competitive pricing strategies to retain market share.

Hurley’s appeal to policymakers reflects broader industry concern that further increases in employer taxes or levies could be passed through to consumers. The spending round and the government’s review of business rates are likely to be scrutinised closely by retailers and trade groups in the run-up to the autumn Budget.