UK retailers are facing a £440 million increase in electricity costs this year despite their energy consumption remaining virtually unchanged, according to a new report from the British Retail Consortium (BRC).
The trade body warns that rising energy bills are placing further pressure on already squeezed retail margins, with businesses increasingly likely to pass on additional costs to consumers.
Its latest report, Counting the Cost: The Growing Burden of Energy NCCs on Retail, reveals that the industry’s electricity costs are expected to rise from £2.72 billion in 2025 to £3.16 billion in 2026, representing a 16 per cent increase in just one year.
Much of the rise is being driven by non-commodity charges (NCCs), which include government levies and network costs rather than the wholesale price of electricity. These charges now typically account for around two-thirds of retailers’ electricity bills, with transmission network charges alone expected to increase by 72 per cent, adding almost £200 million to the industry’s annual costs.
The findings come as retailers grapple with a wider increase in operating expenses, including an estimated £6.5 billion in additional employment costs over the past two years. These include higher employer National Insurance contributions, increases to the National Living Wage and other employment-related expenses.
According to the BRC, retailers have absorbed as much of these rising costs as possible to protect consumers. However, with margins already under pressure, the trade body warns that further increases could lead to higher prices on the shop floor.
It is now calling on the government to extend energy cost relief schemes to electricity-intensive retailers, remove renewable energy policy costs from electricity bills and introduce greater stability and predictability in network charges.
“Retailers’ energy bills continue to push up the price of everyday essentials for shoppers everywhere,” says BRC chief executive Helen Dickinson. “With another £440 million increase this year despite their energy use barely changing, the chancellor must take action to reduce the plethora of policy levies, as well as stabilise the predictability of network charges that are driving up the cost of energy.
“Doing so would ease pressure on retailers, giving them breathing space to invest in keeping prices down for households and keeping people in jobs.”