The chief executive of Aldi UK & Ireland, Giles Hurley, has cautioned that the upcoming Autumn Budget could lead to higher food prices and dampen consumer spending in the crucial run-up to Christmas.

Hurley’s warning comes as the supermarket chain reported a slight increase in annual sales to £18.1 billion, but a drop in profits of more than a fifth to £435.5 million, a decline attributed to investment in price cuts, infrastructure, and higher pay.

Hurley pointed to the impact of last year’s National Insurance rise and new packaging regulations, saying these costs have already “rippled through to prices on the shelf edge”. He told the BBC, “Any policies which affect the operating costs of business should be considered very, very carefully because of the very real risk they find their way… back into the food system and onto prices”.

The late November timing of the budget, set for 26 November, has also injected uncertainty into the market, with Hurley telling The Guardian, “There is no doubt the budget does create a bit of uncertainty. If you ask customers across the length and breadth of the country they would say that inflationary pressures are persistent. Inflationary challenges are just tremendously challenging. [For consumers, grocery inflation] comes on top of bills elsewhere going up. Household groceries have become a bigger proportion of household income, without question”.

More than 60 retailers have written to Chancellor Rachel Reeves, urging her to avoid further taxes on the industry, which has already been hit by government revenue-raising measures. The British Retail Consortium has warned that planned reforms to business rates could result in hundreds of store closures.

The Food and Drink Federation has raised its forecast for food and drink inflation to 5.7 per cent by the end of the year, up from a previous estimate of 4.8 per cent. The Bank of England has also warned that new levies on retailers to reduce packaging waste could push food prices higher this autumn.

Despite the challenges, Hurley remains optimistic about the festive season, noting a trend for shoppers to spend more on home dining experiences. “We expect that trend to continue this Christmas. Shoppers are prioritising value. There definitely is a trend we are seeing with customers treating themselves at home rather than going out,” he told The Guardian.

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