'The dam is starting to break': Retail chiefs sound alarm over soaring costs as prices in shops rise at fastest pace for two-and-a-half years

Retail chiefs have warned the 'dam is starting to break' as soaring costs push up prices on the shelves at the fastest pace for two-and-a-half years.

In last ditch plea before tomorrow's Budget, industry leaders urged Chancellor John Healey to 'slash employment costs' and ease the mounting tax burden or 'households will end up paying the price'.

It came as figures from the British Retail Consortium (BRC) showed shop prices are 2.1 per cent higher than they were a year ago – the sharpest increase since early 2024.

'The dam is starting to break on the huge wave of costs retailers have absorbed over the last two years,' said BRC chief executive Helen Dickinson.

'The message to the Chancellor ahead of tomorrow's Budget could not be clearer: act now or prices will keep on rising.

'Act now or prices will keep on rising,' said the British Retail Consortium.

'Retailers cannot endlessly swallow higher business rates, employment costs, energy bills, and packaging taxes. Without a change of course, October's jump in inflation is only the beginning.

'Our recipe for the Chancellor is simple. Slash employment costs. Cancel the 3.5 per cent business rates increase. Remove shops from the high-value surtax. Otherwise, households will end up paying the price.'

The intervention is just the latest from an industry reeling from the impact of war in the Middle East and extreme weather as well as higher costs under Labour.

Sainsbury's boss Simon Roberts last week warned Healey against 'any repeat' of previous Budgets.

In particular, Roberts warned of 'the impact of the tax on employing people through national insurance' and other costs 'that are going to cause food inflation'.

He was echoing remarks made by Marks & Spencer boss Stuart Machin, who branded Labour's previous Budgets a 'disaster' and urged Healey to 'take the handcuffs off business'.

Labour's first two Budgets saw businesses hit with higher costs, including a surprise hike in employer National Insurance contributions and an increased business rates bill.

Fears of further price rises came as food inflation rose 2.9 per cent in October, compared to 2.5 per cent in September, driven by pantry staples.

Non-food inflation also jumped to 1.7 per cent, close to three-year highs, thanks to high energy and transport costs heaping pressure onto firms.