ANOTHER major retailer has warned of price rises following the Government’s Budget tax raid.
The boss of M&S said it would have to pass on extra costs as a result of the upcoming hike to employer National Insurance contributions (NICs) and minimum wage.
Stuart Machin said the retailer wanted to pass costs on “as little as possible” but had been forced to tweak its business plan for the coming years.
He added any price rises would be “small and behind the market” but did not say how much exactly they would go up by.
Before Christmas, M&S warned that the combined rise in NICs and minimum wage would cost the company £120million.
Mr Machin said today: “Our suppliers are also feeling the pinch, and that comes through straight to retail.”
The M&S boss, who took the helm in 2022, said he did not foresee big job losses following the Government’s tax raid.
However, he said the retailer would have to be diligent on where it recruited new staff.
“Does it make us look at how we recruit? Of course it does, and that does mean we have to think about where we invest.”
The price warning comes despite M&S posting positive sales over the busy festive period, driven mostly by its food division.
The retailer made £4.06billion in sales during the three months to December 28, up 5.6% compared to the same period the year before.
M&S food sales grew 8.7% year-on-year, and the department made up just under two-thirds of total sales.
In contrast, the company saw 1% sales growth across its clothing, home and beauty departments.
M&S is one of a number of retailers and pub chains warning of price rises.
It comes after the Government’s decision to increase employer National Insurance contributions (NICs) from April from 13.8% to 15%.
Planned raises to the minimum wage have piled further pressure on businesses.
The National Living Wage which applies to those aged 21 and over will increase by 77p to £12.21 from April 1. Rates for younger workers will also go up.
The British Retail Consortium, which represents UK retailers, yesterday said it expects to see food prices rise by 4.2% in the second half of this year.
Today, chief executive of Tesco, Ken Murphy, refused to rule out future price rises, stating: “What I won’t say is there will be no inflation, but we’ll do out very best to minimise the impact.”
The boss of major bakery chain Greggs Roisin Currie said it had already hiked the price of sausage rolls and other customer favourites following a rise in the national living wage and the upcoming rise to employer NICs.
A host of businesses have warned of price rises due to the Government's tax raid. The list includes:
Earlier this week, Next said it would need to push through an “unwelcome” 1% rise in prices and launch self-service tills to drive down staffing costs.
The retailer reported a better-than-expected 5.7% rise in underlying full-price sales for its fourth quarter so far.
But over the new financial year to January 2026, it expects sales growth to slow to 3.5% and for group profits to increase by a more muted 3.6% to £1.05billion.
Halfords has warned it may be forced to push up prices at its repair garages after saying its wage bill would rise by around £23million.
Wetherspoons, Royal Mail and Primark are among the businesses that have said shoppers will pay more as a result of the tax increase.
Employers currently pay NICs on workers earning £9,100 or more a year, at 13.8%.
But from April 6, this will rise to 15% and the threshold at which bosses pay them will fall to £5,000.
These are separate to the contributions made by workers which are not increasing.
NATIONAL Insurance is a tax on your earnings, or profits if you're self-employed.
These contributions make you eligible for things like the state pension and certain benefits.
You’ll usually pay National Insurance Contributions (NICs) when you’re over the age of 16 and earning a certain amount.
For example, if you earn £1,000 a week, you pay nothing on the first £242.
Earn over that and you pay 10% on the next £725 – so £72.50. Then you pay 2%o on the rest, so £33, which works out as 66p.
For the self-employed rates are slightly different.
You can also get something known as National Insurance in some circumstances when you’re not working, for example when you have kids and claim certain benefits.
NICs are usually taken automatically by your employer and paid to HMRC, so you don’t need to do anything.
You can see how much NICs you pay on your wage slip.
Anyone working for themselves usually has to pay NICs themselves when completing a self-assessment tax return.
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