J Sainsbury PLC (LSE:SBRY) has become the latest in a string of businesses to warn of increased tax costs feeding through to higher prices for consumers.
Chief executive Simon Roberts said higher employer national insurance contributions (NIC) after last month’s Budget were set to cost Sainsbury’s roughly £140 million.
“I don't think you can shy away from the fact that, because of the changes in everyone's cost base, it is going to feed through into higher inflation,” he said on Thursday.
Marks and Spencer Group PLC (LSE:MKS) and JD Wetherspoon PLC (LSE:JDW) issued similar warnings on Wednesday after chancellor Rachel Reeves announced employer NIC would rise to 15% on salaries above £5,000, against 13.8% on those over £9,100 currently, in the Budget.
M&S boss Stuart Machin refused to rule out price rises following the supermarket’s results on the back of what he dubbed a “double whammy” of a higher rate and lower threshold.
He warned the tax increase was set to land M&S with a £60 million increase in costs. Combined with higher minimum wages, these were set to grow by £120 million.
Tim Martin, chief executive of Wetherspoons, forecast a £60 million increase in bills on the tax increase in the meantime.
“All hospitality businesses, we believe, plan to increase prices, as a result,” he said.
Primark owner Associated British Foods PLC (LSE:ABF) had signalled investment could be diverted outside of the UK earlier in the week in response to the growing tax burden.
Roberts’ comments come after Sainsbury’s reported a 4.7% increase in adjusted pre-tax profit to £356 million for the first half of the year on Thursday.
“This barrage of costs coming at us is significant and we're an industry, a very efficient industry and intensely competitive, and there just isn't capacity to absorb all of this,” he added.