The retail sector is bracing for a £140m increase in business rates following the latest CPI inflation figures.
- Inflation, as measured by the CPI, saw a 1.7% rise over 12 months to September 2024, a decrease from August’s 2.2%.
- CPI including housing costs rose by 2.6% over the same period, down from 3.1% in August, as reported by the ONS.
- Clothing and footwear prices experienced a growth slowdown, with women’s and menswear prices falling while children’s footwear prices increased.
- The British Retail Consortium warns that continuous rise in business rates damages high street investment and job creation.
The retail industry is anticipating a significant financial burden, estimated at £140 million, due to an increase in business rates. This development follows the release of the latest consumer price index (CPI) inflation figures by the Office for National Statistics (ONS). These figures, critical in determining adjustments to business rates, indicate a 1.7% rise in CPI over the 12 months leading up to September 2024. This is a notable decrease from the previous month’s figure of 2.2%, yet it remains a point of concern for the sector.
Additionally, CPI including owner occupiers’ housing costs, known as CPIH, reported a 2.6% increase over the same period. This is a decrease from August’s 3.1%, reflecting broader economic adjustments.
The retail prices in clothing and footwear categories have shown modest year-on-year growth. However, this growth has slowed, with a notable decline in women’s and menswear prices. Offsetting these decreases, prices for children’s footwear have risen, influenced by the demand surge as schools reopened following the summer break.
Kris Hamer, the British Retail Consortium’s Director of Insight, highlighted the implications of these inflation figures on the retail industry, stating that they could lead to a £140 million increase in business rates by next April. He emphasised the challenges posed by incremental increases in business rates, which have adversely affected the vitality of high streets and town centres. According to Hamer, these increases hinder investments and the establishment of new retail locations and job opportunities.
Hamer called upon Chancellor Rachel Reeves to consider the BRC’s proposed Retail Rates Corrector. This initiative aims to reduce business rates on retail premises by 20%, which could rebalance the disproportionate tax burden faced by retailers compared to other industries.
The retail industry must navigate the pressures of rising business rates amidst fluctuating inflation figures.
