Supermarket bosses meet Rachel Reeves amid severe food price warning

Wednesday 01 April 2026 2:24 pm
| Updated:

Wednesday 01 April 2026 6:32 pm

Bosses from some of the UK’s biggest supermarkets met with Chancellor Rachel Reeves on emergency cost of health talks on Wednesday, amid warnings that food prices could rise to double figures this year.

Major retailers including Tesco, Sainsbury’s and Morrisons took to Downing Street after an attempt to bring together industry bosses last week was abandoned amid backlash from staff who planned to teach retailers about “making a profit.”

The meeting came as the Food and Drink Federation (FDF), which represents 12,000 UK food and drink manufacturers, warned that food inflation could rise by 10 per cent this year, as the Iran war added to the list of cost pressures facing retailers.

The tete-a-tete was attended by executives from Tesco, Sainsbury’s, Morrisons, Aldi, Lidl, Co-Op, Marks & Spencer, Iceland, and Ocado. The British Retail Consortium (BRC) was also present.

Asda did not attend the meeting, a week after its boss took aim at the government over a lack of support for farmers and petrol traders.

Iceland’s chief executive Richard Walker, who is a cost-of-living adviser to the government, did not attend due to a conflict of interest and was represented by Stuart Lendrum, director of the budget store for products, operations and operations.

A government spokesman said: “The chancellor and environment secretary had a good meeting with a leading British supermarket to discuss the economic consequences of the conflict in the Middle East.

“They agreed to work together to explore what else can be done to reduce the cost of living for consumers and strengthen supply chains.”

Among the issues raised by the Chancellor by supermarket bosses were tax and regulatory windfalls aimed at retailers.

‘Government should review policy costs in supermarkets’

City AM understands that the issues on the table include new changes to workers’ rights, the latest increase in employers’ national insurance funding and the minimum wage – which came into effect today – and a package deal tax.

The Extended Producer Responsibility Tax (EPR) has been a bone of contention for some retailers in recent months, including retail giant John Lewis and sausage maker Heck.

The EPR tax is levied on large businesses to contribute to the disposal of their packaging, with heavy goods such as glass incurring large charges.

Earlier this month, premium drink mixer brand Fevertree announced it was taking the Environment Agency to court over the levy, which it believes has been unfairly applied to its glass bottles.

BRC has asked the government to work with retailers to stop the rise in consumer prices.

Chief executive Helen Dickinson said: “Retailers had a constructive meeting with the chancellor. Supermarkets are doing everything they can to keep food prices low and maintain the ongoing stability of their supply chains.

“Although the conflict in the Middle East means that inflation is inevitable, there are local policy measures that the government can draw on to reduce some of the inflationary pressures.

“The industry is committed to working with the government to consider these issues further and on ways to further support British families.”

The Treasury said it will use the conference to understand the rate of price rises caused by energy costs and supply caused by the Iran war, although supermarkets will also try to raise these tax and regulatory burdens.

Last week, Marks & Spencer boss Stuart Machin said “strategic costs” to retailers had driven up energy bills, pointing the finger directly at the government.

Reeves offered to meet supermarket owners last week, but the chancellor was criticized after his invitation was described as an attempt to educate retailers about allegedly “profiteering” from the Middle East crisis.

Asda boss: claims of profiteering ‘absurd’

Reeves faced a similar backlash earlier this month when he called on petrol suppliers to discuss allegations of “price gouging” amid rising fuel prices.

The trade union representing petrol traders called off the meeting at the last minute – criticizing the Councilor’s “abyss” speech – before it was rescheduled.

Last week, Asda’s chief executive, Allan Leighton, called on the government to “stand up and do something” to help farmers, and reduce fuel prices.

Asda has more than 300 petrol stations in the UK, and Leighton has also dismissed the government’s petrol “profit” claim as “absurd”.

Simon Roberts, chief executive of Sainsbury’s, sought to allay fears of price rises, saying fixed price contracts on energy and fertilizer costs would keep energy costs from rising in the future.

But the FDF has upgraded its food price forecast for this year, from 3.2 to nine percent – although the trade union said it could rise to double digits if the war continues.

The FDF said their forecast is based on the assumption that restrictions on the Strait of Hormuz, a key shipping lane, will be lifted within the next few weeks.

Dr Liliana Danila, Chief Economist, The Food and Drink Federation (FDF), said: “The food and drink sector is already feeling the force of this political fear.”