Yahoo Finance Minimum wage rises risk driving up the cost of groceries, says Aldi boss
The boss of Aldi has warned Downing Street that increases in the minimum wage will drive up food prices for shoppers, as ministers race to tackle the cost of living crisis.
Giles Hurley, chief executive of Aldi in the UK and Ireland, is understood to have suggested that Britain cannot have both a high wage economy and low prices during a roundtable at No 10 earlier this month.
Increases in the minimum wage put inflationary pressure on the entire food sector, Mr Hurley told supermarket executives and food production chiefs at the summit.
Mr Hurley’s comments were made during a break-out session chaired by Minette Batters, head of the National Farmers' Union, on the innovations needed to drive growth at Rishi Sunak’s “Farm to Fork” summit.
The disclosure comes as the Government considers asking supermarkets for a French-style cap on the price of basic foods such as bread and milk, in what would be the biggest intervention in the grocery market for 50 years.
Sources close to Aldi, which markets itself as a cheaper option for British shoppers, insisted that they related to the wider food sector rather than supermarket pay.
Separate sources said that Ken Murphy, the chief executive of Tesco, pointed out the importance of paying staff in the food production and retail sectors fairly.
Ministers' focus should be on mitigating the impact of rising costs as a result of Russia’s war against Ukraine rather than limiting the minimum wage, the Tesco chief is understood to have said.
The minimum wage – called the National Living Wage for workers 23 or older – is set based on a recommendation by the Low Pay Commission, a group of experts, and increases on April 1 each year. The main rate went up by 9.7pc to £10.42 in 2023. It has doubled since 2008.
Economists have repeatedly warned that ratcheting up minimum wages risks causing inflation, because employers such as food manufacturers are forced to increase their costs in order to turn a profit.
The Downing Street summit was also attended by Kaleb Cooper and Charlie Ireland, who shot to fame as farm contractor and land agent respectively on Jeremy Clarkson’s Amazon Prime TV show about his inept attempts to run his Oxfordshire estate.
The comments come as supermarket chiefs fight back against claims the high rate of inflation is being used as a cover for making larger profits.
The Competition and Markets Authority (CMA) has opened an investigation into supermarkets over high food and fuel prices.
Regulators want to know whether there has been a failure in competition, forcing customers to overpay.
An investigation into the fuel market by the CMA has already found evidence of increased profit margins on petrol and diesel.
Sainsbury’s chief executive Simon Roberts told the BBC last week that Britain’s second-biggest supermarket chain had “absolutely not” profited from soaring food prices.
He said that pay rises at Sainsbury’s of more than 10pc had contributed to rising prices.
Mr Hurley last month accused Aldi’s supermarket rivals of trying to sabotage plans to expand to 1,200 UK stores by 2025.
He said: “We're receiving more objections from our competition than we used to.
“If you look at the price gap between Aldi and the more expensive traditional supermarkets it's been very consistent for years and I guess one of the ways to try to prevent customers from taking advantage of that is to slow down or stop openings.
“We roll with it, because it will slow us down, but it won’t stop us. We’re going to keep opening stores, and we will bring a store within easy reach of every customer in the UK no matter what.”
Aldi declined to comment on Mr Hurley’s remarks during the Downing Street Food to Fork summit.
