Electrical goods retailer Currys has said that some price increases will be “inevitable” after tax rises announced in the latest Budget.
Currys boss Alex Baldock said the “unwelcome” tax changes announced by Chancellor Rachel Reeves will also put a dampener on investment and hiring plans.
A rise in employer National Insurance contributions and the minimum wage going up have led several businesses to warn they will have to pass on costs to consumers.
Currys said recent changes to tax and other government policy would increase its costs by £32m, and it had only planned for about half of that.
Those costs break down as £12m from increased National Insurance contributions, £9m from the rise in the National Living Wage, £2m from business rates due to inflation, and £9m from its supply chain hiking costs due to wages and tax, the firm said in its first-half results.
“The unwelcome headwinds from UK government policy… [will] add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable,” said Mr Baldock.
The government has insisted that it has been taking tough choices to lay the groundwork for future economic growth.
Last month Currys was one of the firms behind a letter from major UK retailers to the chancellor saying that High Street job losses were “inevitable”, prices would rise, and shops would close because of tax increases in the Budget and other rising costs.
Businesses including Sainsbury’s, Marks & Spencer and BT have all hinted at price rises due to the changes, while pub chain Wetherspoons has said “all hospitality business” will increase prices.
Primark’s owner has also said it may invest more overseas due to the “weight of tax rises” in the UK.
The comments from Currys came as it reported a loss before tax of £10m in the half year to 26 October, down from a £44m loss a year earlier.
The retailer makes most of its profit in the second half of the year, which includes Black Friday and the key Christmas trading period.
Sales for the half year rose by 1% to £3.92bn across the group, with a “strong” performance in the UK helped to offset falling sales in its Nordics business.
Mr Baldock said he was “very encouraged” by the company’s progress, and profits were expected to grow this year.
