Minimum wage increases threaten to drive up the cost of groceries, says Aldi boss

The Aldi boss has warned Downing Street that minimum wage increases will drive up food prices for shoppers as ministers scramble to address the cost of living crisis.

Giles Hurley, CEO of Aldi in the UK and Ireland, is said to have suggested at a number 10 round table earlier this month that Britain cannot have both a high-wage and low-price economy.

Increases in the minimum wage will put inflationary pressure on the entire food sector, Hurley told supermarket executives and heads of food production at the summit.

Mr. Hurley’s remarks were made during a breakout 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 revelation comes after the government is considering asking supermarkets for a French price cap on basic foodstuffs such as bread and milk, in what would be the biggest intervention in the supermarket market in 50 years.

Sources close to Aldi, which markets itself as a cheaper option for UK customers, insisted they related to the wider food sector rather than supermarket payments.

Separate sources said Ken Murphy, Tesco’s CEO, pointed out the importance of fair pay for food production and retail workers.

Ministers should focus on mitigating the impact of rising costs from Russia’s war on Ukraine, rather than capping the minimum wage, the Tesco chief is said to have said.

The minimum wage — called the National Living Wage for workers 23 or older — is set based on a recommendation from the Low Pay Commission, a group of experts, and is increased on April 1 each year. The cap rate increased by 9.7 per cent to £10.42 in 2023. It has doubled since 2008.

Economists have repeatedly warned that raising minimum wages could cause inflation as employers such as food manufacturers are forced to increase costs in order to make a profit.

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The Downing Street summit was also attended by Kaleb Cooper and Charlie Ireland, who rose to fame as farm contractor and land agent respectively in Jeremy Clarkson’s Amazon Prime TV show about his inept attempts to run his Oxfordshire estate.

The comments come as supermarket chefs fight back against claims that high inflation is being used as a cover for making bigger profits.

The Competition and Markets Authority (CMA) has opened an investigation into supermarkets due to high food and fuel prices.

Regulators want to know if there has been a failure in competition, forcing customers to overpay.

A study of the fuel market by the CMA has already found evidence of higher profit margins on gasoline and diesel.

Sainsbury’s chief executive Simon Roberts told the BBC last week that Britain’s second largest supermarket chain had “absolutely not” benefited from rising food prices.

He said wage increases at Sainsbury’s of more than 10 percent had contributed to rising prices.

Hurley last month accused Aldi’s supermarket competitors of sabotaging plans to expand to 1,200 stores in the UK by 2025.

He said: “We are getting more objections from our competition than before.

“If you look at the price differential between Aldi and the more expensive traditional supermarkets, it’s been very consistent for years and I think one of the ways to try to prevent customers from taking advantage of that is to slow down or close openings.

“We will continue with it because it will slow us down, but it will not stop us. We will continue to open stores and we will put a store within reach of every customer in the UK, come what may.”

Aldi declined to comment on Hurley’s comments at the Downing Street Food to Fork summit.

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