Trade associations and supermarket bosses have hit out at the reported proposals, with the head of M&S calling them ‘completely preposterous’.
Everyday food items could face price caps, according to reports (Image: Getty)
Supermarket chiefs have blasted the idea of price caps on essential food items. Reports claim the Government has urged supermarkets to limit the price of everyday foods like eggs, bread and milk in return for the lifting of some regulations.
A Government minister denied plans for price caps but confirmed that it is holding talks with supermarkets amid concerns over rising inflation. M&S boss Stuart Machin said he has had “no direct communication” with the Government about the reported proposals which he described as “completely preposterous”, while former Asda chairman Lord Stuart Rose branded a potential cap as “idiotic”.
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Treasury Minister Dan Tomlinson downplayed the prospect of price caps, telling Sky News “this isn’t something we’re looking at” when asked whether there had been conversations with supermarkets about doing so.
He told BBC Radio 4’s Today programme: “Of course, the Government is going to be having conversations with supermarkets about what more we can do to support households, but no, we are not going to be implementing a mandatory price cap.”
It comes after Scotland’s First Minister John Swinney pledged to cap the price of essential items.
Pressed on whether Treasury ministers would like a voluntary agreement with supermarkets to control prices, particularly on essential items, Mr Tomlinson said people are concerned by rising prices.
He added: “It’s right that the Government looks across the board at what more we can do, both government levers, but also talking to industry about the steps that they could take to support people with the cost of living.”
UK food inflation rose to 3.7% in April and Foreign Secretary Yvette Cooper on Tuesday warned of the risk of “sleepwalking into a global food crisis” as a result of Iran’s blockade of the Strait of Hormuz which has also sent fuel prices skyrocketing.
Trade bodies have voiced concerns over the price cap reports.
A spokesperson for The Food and Drink Federation said the Government must “focus on the root causes of rising food inflation, not the symptom”.
“We don’t believe the answer is a price cap and it’s not clear to us how those proposals would work in practice,” they said.
Helen Dickinson, chief executive of the British Retail Consortium, added: “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.”
The Financial Times had 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.
The Treasury also reportedly asked supermarkets for guarantees that British farmers would not lose income from price caps.
A Treasury spokesperson 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.”