Aldi Warns of Higher Food Prices Amid Falling Profits and Rising Costs

The chief executive of Aldi UK and Ireland, Giles Hurley, has cautioned that new government measures raising business costs could translate into higher food prices for Britons. Speaking after Aldi’s UK operating profit slumped by more than a fifth, Hurley urged Chancellor Rachel Reeves to weigh the impact of potential tax rises, business rate hikes and the Employment Rights Bill as the next budget approaches.

Hurley noted that recent regulatory changes, including an increase in employer national insurance contributions and the introduction of a new packaging levy, have already contributed to higher supermarket shelf prices. With shoppers under strain from the high cost of living, Aldi’s emphasis on price promotions, competitive wages, and continued store openings has led to squeezed profits. The discounter’s UK operating profit fell from £552.9 million in 2023 to £435.5 million last year, while pre-tax profit dropped to £416 million from £536.7 million. Despite these headwinds, Aldi’s UK revenue edged higher from £17.9 billion to £18.1 billion, reflecting market share gains as consumers increasingly turned to the discount supermarket.

Aldi, claiming a UK market share of 10.8 per cent, has seen about seven in ten UK households shop at its stores. Like-for-like sales did fall as Aldi invested in low prices and expanded its estate. Hurley flagged that the retailer has experienced “significant growth from switching gains as shoppers move from other more expensive supermarkets.” Many consumers, he observed, are opting for Aldi’s premium own label products as they choose to “treat themselves at home,” with sales in this range rising by 14.5 per cent over the last 12 weeks according to Kantar data.

Persistent inflation and the uncertainty surrounding the upcoming budget are weighing heavily on consumer sentiment, with Hurley describing these pressures as both “persistent and urgent.” He called on the government to boost investment in British farming as a way to underpin food sector resilience and stave off further cost volatility. Hurley made the case that increasing domestic food production capacity could ultimately help temper prices for consumers.

Aldi plans to continue investing in the British market, earmarking £1.6 billion to open 80 new shops in the next two years. With a current footprint of 1,060 stores and the aim to reach 1,500, Hurley pointed out that distance remains the main barrier stopping even more households from switching to Aldi. The expansion strategy is focused on providing affordable groceries to more communities across the UK and ensuring widespread access to lower prices.