Fears have been raised of a spike in food bills amid warnings that Labour could heap more costs on businesses at the Budget.

An industry body said food and drink inflation could reach 5.7 per cent by the end of the year, pointing to the effects of the national insurance raid and new packaging taxes.

Meanwhile, the boss of Aldi has highlighted 'persistent and urgent' pressures on shoppers and sounded alarm on 'ripple effects' of more costs for business.

The grim messages come as the government prepares to push forward with its employment rights overhaul.

Keir Starmer has indicated he will ignore pleas to ease the proposals, which would give workers 'day one' rights to statutory sick pay and protection from unfair dismissal, as well as loosening strike rules.

The Tories have estimated that the measures will add £154 for every worker hired, on top of the £800 annual cost of the NICs increase.

An industry body said food and drink inflation could reach 5.7 per cent by the end of the year, pointing to the effects of the national insurance raid and new packaging taxes

There are concerns that Rachel Reeves is looking to raise billions of pounds more in tax at the Budget

The Food and Drink Federation (FDF) said current price rises were 'steeper than anything in recent decades'.

The group - whose members make a quarter of all food and drink sold in the UK - previously forecast the rate to be at 4.9 per cent in September and 4.8 per cent in December.

The group's analysis of longer-term trends found that between January 2020 and July 2025, food and non-alcoholic drink prices increased by 37 per cent - compared with 28 per cent for overall prices.

Some products have seen particularly steep increases with sugar soaring by 56 per cent, whole milk by 46 per cent, and cheese by 31 per cent, according to the analysis.

The FDF said that UK food inflation has been higher than other European countries in recent months, including France, Germany and Spain, indicating that domestic policies have played a key part.

It pointed to a higher rate of employer weighing heavily on the sector.

Giles Hurley, Aldi's UK and Ireland chief executive, said the retail industry 'has been really clear that we would strongly advise that any policies and measures that are adopted don't add costs to business operations because of the risk that they can find their way through to the food sector'.

Food manufacturers have absorbed rising production costs over recent years but are increasingly have to pass it on to consumers through higher prices in shops, the FDF argues.

Liliana Danila, the FDF's lead economist, said: 'Looking at the longer-term picture, today's prices are steeper than anything in recent decades.'

She added that spikes in energy and raw ingredients prices had now stabilised, meaning inflation was being 'fuelled by the financial impact of domestic policies, now trickling down to supermarket shelves'.

FDF chief executive Karen Betts said the UK was an 'outlier' against comparable European economies, adding: 'The costs are such that companies can no longer absorb them and are having to pass at least some of them on to consumers.

The boss of Aldi has highlighted 'persistent and urgent' pressures on shoppers and sounded alarm on 'ripple effects' of more costs for business

'As this autumn's Budget looms, it's critical that Government does not add further to the already high costs of regulation in our sector.

'We've been hit by rising taxes, employment costs and a new packaging tax.

'We're calling on Government to help us turn this tide by partnering with industry to attract investment, accelerate productivity growth, boost skills and grow exports across our sector.

'This will help counter inflation and secure a more resilient future for UK food and drink manufacturing.'

Fears of spike in food bills as firms face Labour pain