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Shoppers face supermarket price hikes, warns Lidl boss after Chancellor’s £7 billion Budget blow
Figures show that inflation has already ticked up by more than expected
THE boss of Lidl has warned that food prices will inevitably rise after the Budget’s tax raid added huge costs for retailers.
Ryan McDonnell, Lidl chief executive, said that the discount supermarket was facing “tens of millions of pounds” in extra costs after the Chancellor hiked employers’ national insurance contributions.
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Analysts have previously estimated Lidl faces a hit of at least £50 million, which Lidl did not dispute.
Mr McDonnell told The Sun: “We are talking about £7 billion for the whole industry. For us it will be tens of millions. With all that cost pressure there will be greater inflationary cost pressures.”
Lidl was one of 80 big retailers to sign a letter to the Chancellor this week warning her that the Budget would result in job losses, store closures and inflation.
It comes as fresh figures today, Wednesday 20, show that inflation has already ticked up by more than expected to 2.3 per cent from 1.7 per cent in September.
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The Lidl boss said the discount supermarket would invest to make sure it was still offering lower prices than its rivasl.
And despite the Budget’s cost burden, Lidl will still hire more staff as it plans 18 new shops in the next few months and 40 in its new financial year.
During the cost of living crisis Lidl swung to a loss as the cost of keeping prices cheaper than its rivals while inflation was at a 40 year high took its toll.
The bulk of Lidl products are own-brand and it uses its European network of 12,000 stores to drive the best deals with suppliers.
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This means it has greater purchasing power than some of its rivals and isn’t as exposed to the huge price increases that big brands, such as Kellogg's, Heinz and Nestle have pushed through on supermarket shelves.
“We have been here before with Brexit, Covid and geopolitical concerns and we have managed capably with market leading prices”, said Mr McDonnell.
Revenues at Lidl rose by 16.9 per cent from £9.3 billion to almost £11 billion in the past year. It has also swung back into the black with pre-tax profits of £43.5 million compared to a loss of £75.9 million.
It now has 964 shops across the UK after opening just one store in the last year, the lowest level for at least a decade.
Mr McDonnell said that Lidl had to “draw breath” and consider investing in new warehouses that were needed to support future store openings as well as sprucing up older shops.
“We are now back on the growth train and we still believe that we can have a network close to 1,000 shops”.
Mr McDonnel said he wanted the government to move faster on its promised business rates and planning reforms. “I just hope that these reforms will make a difference and it is balanced.”
Despite the slowdown in store openings in the past year, Lidl is still the fastest growing supermarket in Britain.
More than 326,000 new shoppers visited Lidl stores in the new year while shoppers took 35 million more trips to Lidl.
Mr McDonnell said that he wanted Lidl to leapfrog its bigger rivals and wanted to make the store “even more British and more relevant to shoppers”.
“We’ve come a long way since we opened our first stores here 30 years ago, from stocking jars of frankfurters to now having over two thirds of our products sourced from British suppliers”, he said.
Lidl said its famous “middle aisle” continued to appeal with shoppers picking up bizarre items from flame-throwers to kayaks and childrens doll houses along with their fruit and veg.
The boss of Lidl said he expected its panettone range and “decadent chocolate train” to be a big hit with shoppers this Christmas.
It is also launching its latest Christmas jumpers in stores tomorrow.
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And just in time for the festive season, Lidl has unveiled a new range of Christmas candles so shoppers can fill their home with festive aromas.
It comes as the budget supermarket has made a huge change at self-service checkouts - and some customers are going to be furious.
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