Aldi UK boss blames two key factors for potential price rises

The UK boss of budget supermarket Aldi has pointed to two key factors that are to blame for the upcoming price rises at the chain.

Consumers in the UK are set to feel the sting of further food price increases, as a number of challenges impact the industry.

While there are two things in particular which could have an effect on food prices, these are both part of the same broader issue being faced by retailers.

This is that businesses' operating costs are going up, meaning that despite Aldi reporting an increase in annual sales up to £18.1 billion, profits dropped over a fifth to £425.5 million.

It comes ahead of Chancellor Rachel Reeves' budget on 26 November, with over 60 retailers writing to the chancellor to urge her not to place any further taxes on the industry.

Cost increases are the main issue, and there are two areas in particular which have hit the sector.

UK food prices have already risen this year (Dominic Lipinski/Bloomberg via Getty Images)

UK chief executive of Aldi, Giles Hurley, warned that one key area was increased packaging costs due to new rules around how goods are packaged.

Another key factor was an increase in National Insurance payments, with Mr Hurley warning that the impact of these had already "rippled through to prices on the shelf edge".

Speaking to the BBC, Mr Hurley said: "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."

There are also more specific pressures which may have an impact on some products in particular.

For example, a pack of beef mince costs around £3.79 at most major supermarkets at the start of the year according to retail expert Ged Futter. However, now the same pack of mince costs over £5 at the UK's biggest chains.

Rising operating costs is impacting retailers like Aldi (Dinendra Haria/SOPA Images/LightRocket via Getty Images)

This could be due to several factors, Mr Hurley explained.

"Cattle prices are up 30% this year, and herd sizes are dropping, and that is playing into the price of mince," he said.

Meanwhile, the Food and Drink Federation (FDF) has said that two factors have had the largest impact on prices.

One is the increased National Insurance contributions we have already heard about, and the other is an increase in the minimum wage.

Mr Hurley said that 'action is needed', saying: "If you speak to customers across the country, they'll tell you that inflation is persistent and urgent."