The BRC calls on government to act on 'soaring' domestic policy costs

The British Retail Consortium (BRC) has published an open call for the government to tackle "soaring" domestic policy costs, warning that these pressures are intensifying the financial impact retailers are already experience in the midst of the current Middle East conflict.

The BRC has warned that retailers are absorbing significant additional costs from the Middle East conflict, on top of additional pressures that are directly influenced by the government and regulators. It noted that in particular rising gas and electricity prices were pushing up production, shipping and distribution costs throughout the supply chain, with this having a knock-on effect on fertiliser, manufacturing and logistics.

It added that while retailers were trying to absorb costs, "those pressures will inevitably filter through to the till over the coming months."

New polling by Opinium for the BRC has revealed the public is concerned about price increases. Four in five people (80%) fear the Middle East conflict will push up food prices, while 73% expect it to raise the price of other products. Additionally 81% are worried about rising energy bills, 76% about petrol and diesel, and 68% about tax increases.

The BRC argued that aside from cost pressures directly related to supply and demand pressures currently connected to the situation in the Middle East, retailers were also facing additional domestic pressures, which are directly influenced by the government and regulators and therefore can be directly addressed.

It cited the rising employment costs from increasing employer NICs and the National Living Wage, as well as the new new packaging tax (EPR), estimated to be costing £1.6 billion. It also noted additional future pressures including the the guaranteed hours provisions under the Employment Rights Act.

Given the combination of these domestic and global pressures, the BRC is calling on the government to take action on the "soaring domestic policy costs" that are within its control.

Helen Dickinson, Chief Executive of the British Retail Consortium, said: "The Middle East conflict is driving up costs across the supply chain and families are right to be concerned. But not every pressure bearing down on retailers comes from the Gulf. Higher national insurance, packaging levies, new regulations, and business energy charges are all domestic policy decisions, made in Westminster, and they can be addressed there. Such action by government would help retailers to keep prices affordable for households.

"Other governments are already acting. Germany has reduced electricity costs for businesses by moving levies off bills and EU leaders are actively discussing similar responses to this crisis. The UK should be moving in the same direction, not treating global instability as cover for inaction on costs of its own making.

"Retailers are working hard to hold prices down, but they cannot do it alone. Every cost government chooses not to address is a cost that will find its way into someone's shopping basket. That is a political choice, and it is one ministers still have time to change – but the window to act is closing."