The retail industry confronts a significant financial challenge with a £140 million increase in business rates due to recent inflation data.
- September’s inflation figures show a decrease in headline CPI from 2.2% to 1.7%, with CPIH also declining from 3.1% to 2.6%.
- Clothing and footwear prices display minimal growth, influenced by reduced prices in men’s and women’s wear despite increased children’s footwear costs.
- The British Retail Consortium highlights how rising business rates contribute to high street decline, urging governmental intervention.
- There are calls for a Retail Rates Corrector, proposing a 20% reduction in business rates to balance tax burdens on retailers.
The retail industry is bracing for an additional burden as business rates are set to rise by £140 million. This development follows the release of inflation figures by the Office for National Statistics. The Consumer Price Index (CPI), a measure of inflation, has decreased from 2.2% in August to 1.7% in September, falling below the Bank of England’s target of 2%. Similarly, the CPI including owner occupiers’ housing costs (CPIH) has declined from 3.1% to 2.6% over the same period. These figures indicate a slowing of inflation, yet the impact on business rates remains substantial.
In the apparel sector, prices have shown only modest increases. Clothing and footwear prices experienced a year-on-year growth of 0.8% in September, down from 1.6% in August. This stagnation is chiefly attributed to reductions in prices for women’s and men’s clothing, which have mitigated the upward trend caused by rising costs of children’s footwear—a seasonal effect as schools resume post-summer break.
Kris Hamer, director of Insight at the British Retail Consortium, expressed concern over the implications of these inflation figures for future business rate hikes. He noted, “The September CPI will determine next April’s increase to business rates, meaning the industry faces paying an extra £140 million.” Hamer pointed to the longstanding issue of escalating business rates, which have hindered investment and retail expansion, contributing to the downturn of high streets and town centers. Without intervention, these challenges might be exacerbated by potential increases in other business taxes during the upcoming Budget announcement.
Amid these financial pressures, there is a strong advocacy for policy changes to alleviate the tax load on retailers. The British Retail Consortium has put forward the Retail Rates Corrector proposal, which aims to cut business rates on retail premises by 20%. This initiative seeks to rectify the perceived imbalance where retailers bear a disproportionately high share of tax obligations, affecting their profitability and growth potential.
The retail industry faces mounting challenges with the impending increase in business rates, urging reconsideration of tax policies.
