Shoppers Brace For Price Hikes As Net Zero Tax Hits Supermarkets

Shoppers across the UK face an extra £1.6bn on their bills this year as supermarkets grapple with the introduction of a new net zero tax. Retail chiefs have warned that more than 80 per cent of the cost of the new recycling tax—taking effect this week—will be passed directly on to consumers. This means basket prices are set to rise, with the overall cost of the scheme expected to reach some £2bn annually for both retailers and manufacturers.

Industry voices, such as Andrew Opie from the British Retail Consortium, have underlined the burden this “multibillion-pound levy” will impose on households already contending with a pronounced cost of living squeeze. Shoppers are left questioning what tangible value these higher prices offer, as inflationary pressures show little sign of respite.

The EPR, or Extended Producer Responsibility scheme, is the mechanism behind the hike. Designed to compel producers of food and drink packaging to finance disposal costs, the Government anticipates it will raise £1bn per year. The tax rate is set according to the weight and disposal complexity of packaging, meaning glass bottles, for instance, will be subject to higher levies than plastics or aluminium.

Sean Murphy of glass packaging leader Encirc has cautioned that the changes will dramatically raise the price of products housed in glass bottles or jars. Recent industry estimates indicate standard bottles of wine could become 9p dearer, while 330ml beer bottles may climb by approximately 4p as a result of the policy. Murphy described the glass bottle tax as “an economic and environmental own goal”, impacting supermarkets, pubs and the glass production sector at large.

Retailers are also contending with an additional £5bn in employment costs following recent rises in National Insurance contributions and the National Living Wage. The British Retail Consortium has labelled the new tax a further inflationary threat, particularly as increased shop prices were recorded in September, rising at an annual rate of 1.4 per cent, up from 0.9 per cent the previous month.

Government representatives insist the scheme will shift the financial responsibility for waste management from taxpayers onto manufacturers, predicting that the revenue generated will support improved recycling services by councils. They claim the changes will underpin vital investment in the UK economy, potentially creating 25,000 jobs, while encouraging greener material choices amongst manufacturers. Retail groups, however, have called for careful ringfencing of the levy to ensure tangible advancements in local recycling, warning that without transparent use of funds, the EPR could risk being just another costly burden with limited benefit to consumers or the environment.