UK supermarkets are being urged by the Government to limit food prices after food inflation rose to 3.7% in April, it has been claimed. The Treasury has asked supermarkets to put a voluntary cap on food prices in return for the lifting of some regulations, it has been reported.
According to the Financial Times, the proposals would see the prices of essential groceries such as eggs, bread and milk being limited by supermarkets. In turn, the Treasury would offer retailers “incentives”, which may include easing packaging policies and delaying potentially costly changes to healthy food rules, the newspaper reports. But the scheme was not welcomed by retailers, with the British Retail Consortium (BRC) saying the Government “must focus on how it will reduce the public policy costs which are pushing up food prices”.
Helen Dickinson, the chief executive of the BRC, the leading trade association for retailers, 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.”
She added: “The challenge facing retailers is a combination of higher energy and commodity costs resulting from the Middle East conflict, and the soaring cost of the Government’s domestic policies.
“The UK has the most affordable grocery prices in Western Europe thanks to the fierce competition between supermarkets.”
The Government, which is understood doesn’t intend to impose price caps, has also reportedly recommended supermarkets to reinvest the savings from the regulation changes to freeze grocery prices.
This comes after UK food inflation rose to 3.7% in April. The Foreign Secretary on Tuesday told an aid summit of the risk of “sleepwalking into a global food crisis” as a result of Iran’s blockade of the Strait of Hormuz.
A spokesperson for the Treasury said: “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.”
