Proactive Investors - A hike to employer national insurance contributions (NICs) following last month’s Budget will no doubt fuel a spike in prices, JD Sports Fashion PLC (LSE:LON:JD.)’s chairman has warned.
Coupled with higher minimum wages and business rate changes, Andrew Higginson signalled a jump in costs would be “too much for industry to bear”.
“There’s only two ways to deal with that,” Higginson, who also chairs industry group the British Retail Consortium, said on BBC Radio 4’s Today programme.
“One is to cut back on investment, cut back on recruitment, cut back on headcount, cut back on jobs,” he continued.
“Secondly, to put up prices and the one thing that will guarantee is that we will see inflation in retail prices coming from the things that were announced.”
Chancellor Rachel Reeves lifted the NIC rate from 13.8% to 15% and cut the threshold at which this was paid from £9,100 to £5,000 in last month’s Budget.
Higginson warned this would contribute to a £5 billion hit annually for retailers, as the national minimum wage also increased by 6.7%.
He added: “It is all very well giving people a [pay rise] but if at the same time inflation goes through the roof, it’s not a real increase, is it?
“I’m guaranteeing you today that if these go through as they are without any sort of feathering, we are going to see significant inflation in prices.
“The cumulative effect of all these changes is too much for industry to bear in the sense of them being able to get on and invest and grow.”
Higginson’s comments see him add to a string of warnings over price rises following the Budget, including by Sainsbury’s, M&S and Wetherspoons.