The bosses of some of the UK’s biggest supermarkets will meet Chancellor Rachel Reeves today, amid warnings that food inflation could rise to double digits this year.
Executives at Tesco, Sainsbury’s, Marks & Spencer, Morrisons and Iceland are expected to attend this afternoon’s meeting after efforts to gather industry bosses last week were abandoned amid concerns ministers planned to lecture the retailers on “profiteering.”
The session comes as the Food and Drink Federation (FDF), which represents the UK’s 12,000 food and drink manufacturers, warned food inflation could rise as high as 10 per cent this year, as the Iran war adds to the list of cost pressures facing grocers.
The bosses of Asda, Aldi, Lidl and John Lewis are unable to attend Wednesday’s tete-a-tete, due to diary commitments.
Iceland chief executive Richard Walker, who is a cost-of-living advisor to the government, will not attend due to the conflict of interest and will instead be represented by Stuart Lendrum, the budget supermarket’s director of product, process and sustainability.
Among the issues set to be raised with the Chancellor by supermarket bosses are the tax and regulatory headwinds facing retailers.
Government ‘should review policy costs on supermarkets’
City AM understands that issues on the table will include new workers’ rights reforms, recent increases to employers’ national insurance contributions and the minimum wage – which came into force today – and a packaging sustainability tax.
The Extended Producer Responsibility (EPR) tax has been a bone of contention for some retailers in recent months, including retail giant John Lewis and sausage maker Heck.
The EPR tax is charged on large businesses to contribute to the disposal of their packaging, with heavy materials like glass incurring significant charges.
Earlier this month, premium drink mixer brand Fevertree announced it is taking the Environment Agency to court over the tax, which it thinks has been applied unfairly to its glass bottles.
The British Retail Consortium, a trade body, has called on the government to work with retailers to stop prices rising for consumers.
Helen Dickinson, chief executive of the BRC, said: “The conflict in the Middle East will undoubtedly increase the pressure on food inflation throughout 2026.
“While the Government can’t change the price of oil, it can look at those domestic policy costs which are already putting pressure on prices.”
The Treasury has said it will use today’s meeting to understand the scale of potential price rises caused by the energy and supply chain costs caused by the Iran war, though supermarkets will also attempt to raise these tax and regulatory burdens.
Last week, Marks & Spencer boss Stuart Machin said “policy costs” on retailers had pushed up energy bills, pointing the finger directly at the government.
Reeves first offered to meet supermarket bosses last week, but the Chancellor was snubbed after her invitation was interpreted as an attempt to lecture grocers over alleged “profiteering” from the Middle East crisis.
Asda boss: claims of profiteering are ‘nonsense’
Reeves faced a similarly spiky response earlier this month when she summoned petrol retailers to discuss claims of “price gouging” amid rising fuel prices.
The trade body representing petrol retailers called off the meeting last minute – condemning the Chancellor’s “inflammatory” language – before it was later rescheduled.
Asda, the UK’s third-largest supermarket, is among the firms understood not to be attending today’s meeting.
Last week, executive chairman Allan Leighton called on the government to “stand up and start doing stuff” to help farmers, and to cut the price of fuel.
Asda runs more than 300 petrol stations in the UK, and Leighton also dismissed the government’s petrol “profiteering” concerns as “nonsense”.
Simon Roberts, the boss of Sainsbury’s, has sought to soothe fears of price inflation, saying fixed-price contracts on energy and fertiliser costs will keep severe cost increases at bay for the immediate future.
But the FDF upgraded its food inflation forecast for this year, up from 3.2 to nine per cent – though the trade association said it could climb into double figures if the conflict persists.
The FDF said their forecast is based on the assumption that blockages to the Strait of Hormuz, a vital shipping passage, will end within the next few weeks.
Dr Liliana Danila, Chief Economist, The Food and Drink Federation (FDF), said: “The food and drink sector is already feeling the force of this geopolitical shock.”
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