UK retailers’ electricity costs are forecast to rise by £440m in 2026 despite broadly unchanged energy consumption, according to analysis from the British Retail Consortium (BRC).
The retail trade body expects the sector’s annual electricity bill to reach £3.16bn, up 16% from £2.72bn in 2025. It attributes much of the increase to policy levies and network charges rather than wholesale electricity costs.
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The BRC is calling for action in the UK government’s forthcoming Budget, its main fiscal statement, as retailers face higher employment costs and continued pressure on household spending.
Network charges drive higher bills
The BRC’s report, Counting the Cost: The Growing Burden of Energy NCCs on Retail, found that non-commodity charges now typically account for around two-thirds of retailers’ electricity bills.
These charges help fund government energy policies and the operation and maintenance of electricity networks.
Transmission Network Use of System charges, which help fund Great Britain’s high-voltage electricity network, are expected to rise by 72%, adding almost £200m to retailers’ bills.
Electricity now accounts for around 90% of the UK retail sector’s energy use, according to the BRC. Investment in lower-carbon operations has increased the sector’s reliance on electricity, leaving retailers more exposed to changes in electricity costs.
Higher costs squeeze retail margins
The increase in electricity costs adds to wider pressure on retailers’ operating expenses.
The BRC estimates that retailers have incurred £6.5bn in additional employment costs over the past two years. These include higher employer National Insurance contributions, a payroll tax, and increases in the National Living Wage, the statutory minimum wage for eligible workers.
The trade body says tight margins are making it increasingly difficult for retailers to absorb further cost increases without raising prices.
Food retailers are particularly exposed to electricity costs because refrigeration requires continuous power, alongside lighting and other essential store equipment.
Shop-price inflation eases
Separate BRC figures showed annual shop-price inflation slowed to 1.4% in September from 1.5% in August. Food inflation also eased, falling to 2.5% from 2.8%.
However, the BRC warns that rising electricity and employment costs could add further pressure to consumer prices.
The impact will vary between retailers depending on factors such as energy consumption, store formats and operating models.
BRC seeks electricity-bill reform
The BRC wants electricity-intensive retailers to qualify for energy-cost relief schemes, including future industrial competitiveness programmes.
It is also calling for renewable-energy policy costs to be funded centrally rather than through electricity bills, alongside reforms to how renewable levies and system charges are recovered.
The trade body also wants greater stability and predictability in electricity network charges, particularly transmission costs.
BRC chief executive Helen Dickinson said government action would give retailers more scope to keep prices down, invest and support employment.
