Government vs retail

SIR – Retailers see the pain of inflation. They see shoppers struggling to manage their budgets, which is why they work so hard to cut costs and hold back price rises wherever possible. So it’s welcome news that recent data from the Office for National Statistics and British Retail Consortium show the first signs of a much-needed dip in food inflation (report, May 30).

Some cost pressures acting right across the supply chain will take time to work their way through to prices at the checkout. Others are firmly in the hands of the Government – namely taxes and regulation.

The Telegraph recently broke the story of a possible Government plan for price controls, which is surely a 1970s solution to a 2020s problem. In reality, intense competition between retailers puts downward pressure on prices, even as rising costs force them up. The focus of interventions should be on making a genuine difference to families, and there are more meaningful actions that the Government could take to keep inflation heading in the right direction.

Over the next year or so a raft of new regulations and taxes will burden retailers – and ultimately consumers – with higher costs. Just as inflation looks to be turning a corner, these new policies put this at peril. The Government needs to look at these in turn, and consider whether to implement, postpone or scrap each one.

The Government’s Resources and Waste Strategy is a £4 billion a year headache for retailers and their customers. Made up of reform to Extended Producer Responsibility – a tax on packaging – and the introduction of a Deposit Return Scheme, this is an unambitious and ineffective strategy that will do little to improve our abysmal recycling rates.

From next April, an inflation-linked business-rates hike is likely to cost retail at least £400 million a year – money better spent on cutting prices.

Finally, new border controls and potential new labelling requirements following our exit from the EU mean that millions of pounds more will be spent on red tape and packaging, including unnecessary changes the Government has chosen to implement as part of the Windsor Framework.

Retailers are playing their part. If the Government persists in introducing this raft of new regulations and tax rises, it has only itself to blame when it fails to meet its own inflation targets.

Helen Dickinson

Chief Executive of the British Retail Consortium

London WC2