UPDATE: UK minister says grocers not being asked to cap food prices

A minister has said the UK government is not urging supermarkets to voluntarily cap the prices of essential groceries.

It comes after the British Retail Consortium criticised the prospect of being asked to limit the price of products such as eggs, bread and milk in return for the lifting of some regulations.

Treasury minister Dan Tomlinson said ‘this isn’t something we’re looking at’ when asked if there had been conversations with supermarkets about bringing in price caps.

He told Sky News: ‘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.’

The Financial Times reported that the Treasury had spoken to supermarkets about offering ‘incentives’ which may include easing packaging policies and delay potentially costly changes to healthy food rules.

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.’

Dickinson also said: ‘The UK has the most affordable grocery prices in Western Europe thanks to the fierce competition between supermarkets.’

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.’

The Treasury asked supermarkets for guarantees that British farmers would not lose income from price caps, according to the FT.

Some measures, including the packaging regulations, generate revenue for the Treasury, it reported.

The government has also recommended supermarkets reinvest the savings from the regulation changes to freeze grocery prices, it added.

This comes after UK food inflation accelerated 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.

Chancellor Rachel Reeves is to set out measures to help households with the cost of living on Thursday.

Writing in The Times, she said she had made decisions which were ‘responsible in the national interest’.

‘I will not tolerate anyone exploiting a crisis to make a quick buck off the back of hardworking people,’ the chancellor wrote.

‘I am clamping down on price gouging, giving regulators new, focused investigatory powers. Where regulators identify concerning practices, they will be encouraged to name and shame.’

Tesco PLC shares were down 1.1% on Wednesday morning, but had fallen more than 3% in earlier trade. J Sainsbury PLC was also off intraday lows, but was trading down 1.0%.

source: PA

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