The retail industry braces for a £140m increase in business rates.
- Recent CPI figures indicate a 1.7% inflation increase for September.
- CPIH inflation fell to 2.6% from August’s 3.1%.
- Clothing prices show mixed trends with footwear for children rising.
- Industry leaders urge reforms to alleviate the tax burden.
The retail sector is currently facing a significant financial challenge as it anticipates a £140 million increase in business rates. This development follows the release of the latest consumer price index (CPI) inflation figures by the Office for National Statistics (ONS), which revealed a 1.7% rise in CPI for the year ending September 2024. This figure marks a decline from the 2.2% increase recorded in August and falls below the Bank of England’s target of 2%.
In addition to CPI, the CPI including owner occupiers’ housing costs (CPIH) showed a reduction, rising by 2.6% in the year to September compared to a 3.1% rise in August. This suggests a deceleration in inflationary pressures, although not uniformly across all sectors.
The clothing and footwear industry recorded a 0.8% year-on-year price growth for September, contrasting with the 1.6% increase seen in August. The decrease was largely driven by reduced prices in women’s and menswear, though this was partially counteracted by higher costs for infants’ and children’s footwear, coinciding with the school term reopening.
Kris Hamer, Director of Insight at the British Retail Consortium (BRC), highlighted the implications of the inflation figures. According to Hamer, the September CPI data will directly influence April’s business rates adjustments, leading to the anticipated £140 million increment. He expressed concern over the cumulative effect of rising business rates on the vitality of high streets and town centres, which hampers investment and limits new retail opportunities.
To alleviate the financial pressures on retailers, Hamer urged Chancellor Rachel Reeves to consider the BRC’s proposed Retail Rates Corrector. This initiative aims to reduce business rates by 20% across all retail establishments, thereby addressing the current imbalance where retailers bear a disproportionately high tax burden compared to other industries.
The retail industry must navigate rising business costs amidst calls for governmental intervention to mitigate the financial strain.
