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In the results of a new survey by the British Retail Consortium (BRC), two-thirds of respondents from across the industry have revealed they intend to raise prices in light of the upcoming increases to National Insurance Contributions (NICs).

Grimmer still, 70% of chief financial officers (CFOs) in retail asked say they are pessimistic about trading conditions for 2025, with food inflation looking like it could hit 4.2% by the end of the year.

The biggest concerns, all appearing in over 60% of CFO’s “top 3 concerns for their business” were falling demand for goods and services, inflation for goods and services and the increasing tax and regulatory burden.

When asked how they would respond to the increases in employers’ NICs from April 2025, two-thirds stated they would raise prices (67%), while around half said they would be reducing the number of hours and overtime (56%). A headcount at head office (52%), and a store headcount (46%)were also offered. Almost one third said the increased costs would lead to further automation (31%).

The impact of the recent budget on wider business investment was also clear, with 46% of CFOs saying they would ‘reduce capital expenditure’ and 25% saying they would ‘delay new store openings.’ 44% of respondents expected reduced profits, which will further limit the capacity for investment.

But the Budget is not the only challenge retailers are facing, with weak consumer confidence and low consumer demand also an issue. As part of the survey, CFOs offered their forecasts for the year ahead. These suggest that shop price inflation, currently at 0.5%, will rise to an average of 2.2% in the second half of 2025. This would be most pronounced for food.

The forecast for sales was more muted. While sales growth is expected to improve on the 2024 level of just 0.7% , at just 1.2% this would still be below inflation. This means the industry could be facing a year of falling sales volumes at the same time as huge new costs resulting from the Budget.

Helen Dickinson, chief executive at the BRC, said: “With the Budget adding over £7bn to bills in 2025, retailers now face difficult decisions about future investment, employment and pricing. As the largest private sector employer, employing many part-time and seasonal workers, the changes to the NI threshold have a disproportionate effect on both retailers and their supply chains, who together employ 5.7m people across the country.

“Retailers have worked hard to shield their customers from higher costs, but with slow market growth and margins already stretched thin, it’s inevitable that consumers will bear some of the burden. The majority of retailers have little choice but to raise prices in response to these increased costs, and food inflation is expected to rise steadily over the year. Local communities may also find themselves with sparser high streets and fewer retail jobs available.

But there is still scope for stemming the flow of problems for the industry, Dickinson believes: “The government can still take steps to shore up retail investment and confidence. Business rates remain the biggest roadblock to new shops and jobs, with retailers paying over a fifth of the total rates bill. The government must confirm the planned reforms will make a meaningful difference to retailers’ bills and that no shop will end up paying more.”