LONDON, Aug. 30 (Xinhua) -- Britain's retail industry is limping into the second half of 2025, squeezed by rising costs, stubborn inflation, and wavering consumer confidence.
More than 60 chief executives from Britain's biggest retailers have written to the Chancellor, urging assurance that no further tax rises will be imposed on retail this autumn.
The country's retail price inflation hits an 18-month high in August, driven by 4.2-percent food price jump year on year, according to the British Retail Consortium (BRC).
The latest price increases have added pressure to families already grappling with the cost of living, said BRC chief executive Helen Dickinson.
"Retailers continue doing everything they can to limit price rises for households, but as the Bank of England acknowledged, the 7 billion pounds in new costs flowing through from last year's Budget has created an uphill battle for retailers," Dickinson noted.
Britain's annual consumer price inflation (CPI) rose to 3.8 percent in July, the highest since January 2024, when it was 4 percent, data from the Office for National Statistics showed earlier.
Guy Leman, spokesman for the BRC, told Xinhua that as inflation has been on the rise over the past few months, retailers, who operate in an industry with tight margins, have to pass on some additional costs from last year's budget in the form of higher prices although they tried hard to absorb higher costs.
Consumer confidence is in the doldrums, according to the BRC. Dickinson said with prices rising, and food inflation predicted to hit 6 percent by the end of the year, households are expected to spend more on retail goods in the coming months.
"Belief in the economy has stayed stubbornly below -30 for six of the last seven months, a far cry from the net positive sentiment in July 2024," she added, noting that consumers see rising prices, gap-toothed high streets, and reports of large businesses falling into administration.
"The pandemic really hit retail hard. But right now there are the worst vacancy rates ever for shop units in our towns and cities," Lyndon Simkin, professor of strategic marketing at Manchester Metropolitan University, told Xinhua.
The COVID-19 pandemic hit the retail industry and it never fully picked up after the pandemic. Huge supply chain hold-ups reduced product availability, Brexit removed some consumers and reduced access to cheaper labor, and the government's taxation and regulations have been the most recent problem, said Simkin.
According to Leman, the increase of tax and national insurance contribution particularly hit industries like retail and hospitality, lowering by about half the threshold that employers have to pay national insurance for their employees, which led to rises in hiring costs and consequent job losses. In the next three years, retail could lose over 150,000 part-time roles.
"We still need city/town centers with shops and services, both to serve the functional needs of certain segments and consumers and to provide a social hub for residents in these communities," said Simkin, noting that measures should be taken in helping with the retail sector in multiple fields, including tax, business rates, national insurance costs, interest rates on capital investment and access to non-UK employees.
Neil Carberry, chief executive of the Recruitment & Employment Confederation noted that action is needed in the Autumn Budget since the fear of further costs, worries about the impact of the Employment Rights Bill and new tax rules are all on employers' minds.
It's vital that policymakers ease the cost pressures on business, said Stuart Morrison, research manager at the British Chambers of Commerce, noting that firms cannot drive forward economic growth if they are continuing to face cost pressures from several directions. ■