Greggs blames Rachel Reeves' minimum wage and National Insurance hikes for £1.35 sausage rolls as bakery warns of further price hikes
Greggs has blamed Rachel Reeves' rise in National Insurance (NI) costs and minimum wages for its increase in the price of sausage rolls and lattes.
Britain's biggest bakery chain saw a 5.5 per cent rise in its costs last year, which was 'primarily driven' by employment costs, including the increase in NI contributions.
Labour staged a £25billion raid on employer NI last year – putting up the rate paid by firms and reducing the salary threshold at which they start to pay it.
The Government also sharply hiked minimum wages, with larger increases for under-21-year-olds bringing them closer to the rate paid to older workers.
Greggs admitted it could not mitigate cost inflation through savings and instead attempted to recover profits through 'careful pricing activity'.
As a result, the Newcastle-based firm increased the price of sausage rolls by 5p to £1.35 and the price of lattes by 10p to £2.25 in January.
Elsewhere, the bakery announced today that statutory pre-tax profits fell by 17.9% to £167.4 million for the year to December 27, compared with a year earlier.
It said the drop in profits was partly linked to the tough market backdrop and a 'spell of particularly hot weather' which knocked high street footfall.
Greggs has blamed Rachel Reeves' rise in National Insurance (NI) costs for its increase in the price of sausage rolls and lattes (File image)
Greggs increased the price of sausage rolls by 5p to £1.35 and the price of lattes by 10p to £2.25 in January
However, boss Roisin Currie said that 'easing inflationary pressures' should boost consumer spending this year.
She said: 'We have come into 2026 planning for another challenging year. When you look at consumer confidence and disposable income you can see that the backdrop is still tough out there.'
Greggs also told shareholders that total sales grew by 6.8% to £2.15 billion over the year, with like-for-like growth also buoyed by its continued store opening programme.
The firm said it had 121 net store openings in 2025, expanding its shop estate to 2,739 locations by the end of the year.
It is targeting around 120 further openings this year as it highlighted ambitions to grow to 'significantly more than 3,000 UK shops over longer term'.
Sales growth was also supported by the expansion of its delivery business and an increase in evening trade.
Over the past year, Greggs has come under pressure from cautious shoppers affected by the rising cost-of-living, higher tax and labour costs, and the growing use of weight-loss treatments.
Ms Currie indicated that there are 'green shoots' and some of these challenges could ease over the current year.
She said: 'Looking into 2026, easing inflationary pressures should provide some support to consumer spending and demand for convenient food-on-the-go continues to underpin the market.'
Should it be up to the customer to pay more when rising wages and taxes hit chains like Greggs?
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