The head of Aldi has warned that potential increases to business expenses in the Autumn Budget could drive food inflation higher.
Giles Hurley, chief executive to the supermarket chain in the UK and Ireland, said supermarkets may no longer be able to absorb additional costs.
He cautioned that households could face food price rises of around 5.7 per cent if financial pressures intensify.
The retail sector has already voiced opposition to new measures that could lift costs for retailers.
A "ripple effect" from higher business expenses could further dent consumer confidence.
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Mr Hurley said "inflationary pressures" remain "persistent and urgent" for consumers across the nation.
He added that a "ripple effect" from higher business expenses could further dent consumer confidence. This comes after just announcing it's set to open 21 new stores across the UK as part of a £1.6billion expansion.
The supermarket boss said retailers have made their stance clear against any policies that would increase operating costs.
Aldi reported total revenues of £18.1billion across its UK and Ireland business in 2024, up slightly from £17.9billion in the previous year.
Growth came largely from new store openings rather than increased sales at existing outlets.
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Operating profits fell sharply to £435.5million, compared with £552.9million in 2023. That represents a fall of about 20 per cent.
The decline followed heavy investment in pricing, store development, refurbishments and higher staff pay.
Same-store sales slipped during 2024, partly due to Aldi’s decision to cut prices across the year.
The supermarket spent £300million to reduce shelf prices in a bid to shield shoppers from inflation.
Aldi has just announced it's expanding once more.
| AldiMr Hurley said the company remains "laser-focused on delivering the lowest prices in the market". He argued that Aldi is "part of the solution" to the cost-of-living crisis through continued price cuts.
The price strategy, while reducing operating profits, was central to Aldi’s efforts during 2024.
Mr Hurley said the retailer has become "more popular than ever" as families seek value. He added that customers are increasingly making Aldi their primary supermarket.
At the same time, Aldi’s Specially Selected premium range grew by 14.5 per cent in 2024.
Mr Hurley said the growth showed how customers are "treating themselves at home, rather than going out".
This balance of budget shopping and selective premium spending reflects how households are adapting.
Consumers appear willing to spend on higher-quality items whilst keeping overall budgets tight.
Despite profit pressures, Aldi is pressing ahead with expansion plans.
The chain has pledged £1.6billion for 80 new UK stores over the next two years.
LATEST DEVELOPMENTS:
Inflation has risen once again | GETTYAldi already runs 1,060 stores and aims to reach 1,500 in the long term.
The programme demonstrates confidence in the UK market despite economic headwinds.
The expansion will create jobs and extend Aldi’s reach into new communities.
Mr Hurley said the discounter’s model of low prices will continue to draw customers.