The Government has reportedly urged supermarkets to limit food prices, according to the Financial Times. The proposals would see grocers voluntarily cap the prices of essential groceries such as eggs, bread, and milk, in return for the lifting of some regulations.
Voluntary Price Caps Proposed
The Treasury has offered supermarkets “incentives” including easing packaging policies and delaying potentially costly changes to healthy food rules, the newspaper reported. In exchange, supermarkets would freeze or reduce prices on key items.
However, the British Retail Consortium (BRC) has pushed back. Helen Dickinson, chief executive of the BRC, said: “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.”
Retailers Warn of Policy Costs
Dickinson highlighted that retailers face higher energy and commodity costs due to the Middle East conflict, along with soaring costs from domestic policies. She noted that the UK already has the most affordable grocery prices in Western Europe thanks to fierce competition.
The Treasury also asked supermarkets for guarantees that British farmers would not lose income from price caps, according to the FT. Some measures, such as packaging regulations, generate revenue for the Treasury. The Government has recommended supermarkets reinvest savings from regulation changes to freeze grocery prices.
UK food inflation rose to 3.7% in April. Meanwhile, Foreign Secretary warned of a risk of “sleepwalking into a global food crisis” due to Iran’s blockade of the Strait of Hormuz. Chancellor Rachel Reeves is set to announce cost-of-living measures on Thursday.
