Rapidly rising inflation is threatening total business rate increases of £1.2 billion next year, with a quarter of the increase to fall on retailers.

The Retail Price Index is the current inflation measure used to calculate the annual business rates increases. With the RPI at its highest since early 2012, businesses should expect a 4% rate increase in 2018 according to CVS Business Rent & Rates Specialists.

The use of RPI is hugely controversial as it is currently 1% higher than the government’s favoured measurement, CPI. In the last government budget, they pledged to changed business rate inflation rise calculation from RPI to CPI, but this will not be enacted until 2020.

High inflation and low consumer confidence means the further increase in business rates could have dire consequences.

CVS CEO Mark Rigby said: “Increases to business rates bills next year, at the level reported for May or higher, could lead to a tsunami of store closures."

He explained: “Retailers are experiencing the weakest sales since June 2013 and higher operational costs through increases to both the National and Minimum Living Wages, the introduction of the Apprenticeship Levy and higher business rates bills overall of 3.8%.”

Broken down, the £1.2 billion equates to an additional £301.69m of rates for retailers, £247.39m for industry, £282.16m for offices and £347.03 for all other workplaces. The rise will coincide with the scaling back of rates relief in 2018.

Before the election every major party called for reform of the business rates system, but it was notably absent from last week’s Queen’s speech which laid out the Government’s priorities for the next two years.