New packaging tax will fuel inflation as retailers struggle with rising costs, says BRC
By Benjamin Chiou
Date: Wednesday 01 Oct 2025
(Sharecast News) - This month's new packaging tax will result in increased prices at shop tills, according to research from the British Retail Consortium on Wednesday.
According to a BRC survey, over 80% of costs arising from the Extended Producer Responsibility (EPR) scheme are likely to be passed on to consumers.
The EPR, which came into effect from Wednesday, is designed to hold producers accountable for the environmental impact of their packaging - including post-consumer waste management - throughout the entire product lifecycle.
UK producers will be charged certain fees depending on the recyclability and reusability of the packaging they choose, with funds being funnelled back into the collection and recycling of packaging, and other waste management services.
However, the BRC claimed that the tax places a "significant financial burden" on retailers, which are unable to absorb higher prices because of the additional costs levied on the industry announced in last year's Autumn Budget. Higher employer contributions to National Insurance and an increased National Living Wage are estimated to result in an additional £5bn a year in labour costs for retailers.
The BRC called on the government to provide clarity on how consumers and the environment will benefit.
"With EPR set to cost industry billions, this new tax will be yet another inflationary pressure, at a time when food prices are already rising fast, with The Bank of England estimating that the policy alone will add 0.5% to food inflation," the BRC said.
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