The retail giant’s CEO, Simon Roberts, said the National Insurance contribution (NIC) hikes for employers could contribute to higher prices in the aisles.
Chancellor Rachel Reeves announced the rates for businesses will rise to 15% from April 2026 with a 1.2% tax hike.
The threshold for when an employee pays the rate will also reduce from £9,100 to £5,000 per year.
Roberts said the company will have to pay £140m more in contributions – a 50% rise on its current level. The alert to shoppers followed the supermarket’s annual announced profits before tax of £356m for the six months to October, which is up 4.7% on the same period last year.
He said: “When you think about the £140m in our business, 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.
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“This industry operates on very low margins, and there just isn’t the capacity in the structure of the way the supermarket industry works to absorb these levels of costs without some impacts on inflation. I think, given the speed [at which] these costs are coming, they will be inflationary.
“We’ll do everything we can to mitigate that impact, but there will be inflationary impacts because our costs are going up.”
The retailer recently expanded its Aldi Price Match scheme to its convenience stores, meaning over 200 products in Sainsbury’s Local stores would cost the same as with the budget retailer.
Government urged to speed up rate changes
As well as warning shoppers of potentially higher prices, Roberts also urged the Government to speed up with plans to reform business rates for high street retailers.
Labour has previously committed to reducing rates for smaller businesses while increasing them for bigger multinationals and tech companies.
Roberts added: “I think [changes to business rates] was a clear expectation that we saw in the manifesto, and we would strongly urge the Government to move more quickly on the reform of business rates for all retail stores. In fact, now on the outcome of last week, business rates next year will actually go up for us.”
