High street fashion giant Next warns prices will rise this year in blow to shoppers
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Next has warned shoppers that prices would have to rise in response to the tax hikes in Labour's Autumn Budget. The high street retail giant has cautioned over slowing sales growth this year and, alongside this, anticipates a £67million increase in wage costs by January 2026 due to the planned rise in employer National Insurance contributions and the minimum wage, set to take effect in April. As a result, Next said it will need to push through an "unwelcome" 1% rise in prices to offset the hit.
In the last Budget, Chancellor Rachel Reeves announced a rise to National Insurance Contributions (NICs) for businesses and confirmed an increase to the National Living Wage. Employers currently pay NICs for most workers earning more than £9,100 a year. The sum they pay is the equivalent of 13.8% of the employee’s earnings above that threshold.
However, in the Budget, the government announced it would increase the tax rate to 15% and reduce the threshold at which businesses must pay to £5,000. Alongside this, the National Living Wage for everyone over the age of 21 will increase to £12.21 an hour - up from the current £11.44. The minimum wage for people aged 18-20 will also rise to £10 an hour, an increase of £1.40. The British Retail Consortium has predicted that these changes will create a £2.3billion bill for the sector.
Next warned that sales growth will pull back sharply over the next year ahead as the Budget measures - which both take effect in April - are set to hit jobs and send prices rising across the economy. Next said: "We believe that UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy.".
