High street electrical chain Currys today warned of “inevitable” price rises as a result of Budget measures it said will add £32 million to its costs.
The coffee machine to laptops retailer described changes announced in Rachel Reeves first Budget in October, including higher rates of employer National Insurance due to come into effect next April as an “unwelcome and material headwind.”
It is the latest in a series of household name companies to say that the Budget announcements will feed through to pricing.
The company added: “Looking to next year, the UK Government budget is likely to add around £32 million of annual cost to our business.
“We will seek to mitigate as much of this as possible through cost saving measures including process improvement, automation, offshoring, outsourcing and other overhead efficiencies. Some price rises are also inevitable. We will further update on this in due course.”
The overall £32 million cost impact is made up of £9 million National Living Wage increases; a £12 million increase in National Insurance contributions, of which £4m is due to the increase in the Employer NI rate to 15% and £8 million is due to the decrease in the NI threshold from £9,100 to £5,000; a £9 million impact from extra NI costs being passed on by outsource partners; and a £2 million increase from the inflation-based increase in business rate taxes.
Chief executive Alex Baldock, who was announcing financial results for the six months to 26 October, added: “Looking ahead, we're confident of continuing our progress, and expect to grow profits and cashflow as promised this year.
“This is despite new and unwelcome headwinds from UK government policy. These will add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable.”
He continued: “We were well prepared for our peak trading period, with healthy stock and market-beating, best-ever deals that show our unmatched importance to suppliers. We're trading in line with expectations. One highlight is rising demand for AI laptops, where we enjoy over 75% market share in the UK. AI is a trend with a lot further to run.”
First half revenue was up 1% at £3.92 billion and the company made an adjusted pre-tax profit of £9 million comparted with a loss of £16 million in the first half last year.
