A Government minister has firmly denied that the Treasury is planning to impose caps on supermarket prices, following reports that retail chiefs were being urged to introduce voluntary limits on essential goods. Treasury minister Dan Tomlinson stated that price controls on items such as eggs, bread, and milk are not under consideration.
Minister's Clarification
Speaking to Sky News, Mr Tomlinson said: "No, that isn't something that we're looking at." When asked about any discussions with supermarkets, he added: "You have to talk to the supermarkets about that. The Government is not looking at doing this. Instead, what we're doing is looking across the economy at what are the different ways that we can help households."
Background of the Reports
Reports had emerged suggesting that the Treasury had approached supermarket chains, urging them to cap prices of key staples like eggs, bread, and milk in exchange for easing regulations. According to the Financial Times, the Treasury offered retailers "incentives," which could include relaxing packaging policies and delaying potentially costly changes to healthy food rules. These measures were reportedly on a voluntary basis and would not mirror the strict price controls of the 1970s inflation crisis.
Industry Reaction
Retailers have expressed alarm over the reports. Helen Dickinson, chief executive of the British Retail Consortium, criticised the idea, stating: "Rather than introduce 1970s style price controls and trying to force retailers to sell goods at a loss, the Government must focus on how it will reduce the public policy costs which are pushing up food prices in the first place." She highlighted that UK grocery prices are already the most affordable in Western Europe due to fierce competition.
Ms Dickinson also noted that retailers face higher energy and commodity costs from the Middle East conflict, as well as soaring costs from government domestic policies.
Chancellor's Upcoming Measures
Chancellor Rachel Reeves is set to outline measures to help households with the cost of living on Thursday. Writing in The Times, she stated: "I will not tolerate anyone exploiting a crisis to make a quick buck off the back of hardworking people." She announced plans to clamp down on price gouging, giving regulators new investigatory powers to identify and name firms that take advantage of the crisis.
The Competition and Markets Authority (CMA) will gain the ability to name and shame companies that change their margins in response to the crisis, along with rapid investigatory powers.
Context of Food Price Inflation
The Office for National Statistics reported that food and soft drink prices rose by 3% in the 12 months to April, down from 3.7% in March. Meanwhile, Foreign Secretary Yvette Cooper warned of a potential global food crisis due to Iran's blockade of the Strait of Hormuz.
The Treasury had previously suggested a voluntary price cap was being considered, with a spokesperson saying: "The Chancellor has been clear we want to do more to help keep costs down for families, and will set out more detail in due course." However, Mr Tomlinson's denial now clarifies the government's position.
