UK supermarkets urged to consider voluntary price caps for essential food | supermarket

British supermarkets have been asked by the government to consider freezing prices of some essential groceries to protect the public from inflation caused by conflict in the Middle East.

Retailers have rejected the plan, criticizing the potential costs of rising taxes, fuel and energy costs and arguing it could raise prices for shoppers across the board.

One supermarket executive called the idea “absolutely crazy”. “This is unnecessary, unwanted and unjustified market intervention,” said another.

The Scottish National Party has pledged to use its devolved public health powers to fix prices on 20 to 50 items, including bread, milk, cheese, eggs, rice and chicken, because price increases are “impacting on nutrition in our country”.

“The UK has the lowest grocery prices in Western Europe thanks to fierce competition between supermarkets,” said Helen Dickinson, chief executive of the British Retail Consortium, a trade body that represents all large supermarkets.

“Rather than introducing 1970s-style price controls and forcing retailers to sell goods at a loss, the government should focus on how to reduce the public policy costs that drive up food prices in the first place.”

Another supermarket source said retailers had not been formally asked to control prices, but plans had been discussed to stock at least one version of basic items such as bread, milk and butter at lower prices.

One person said: “There has been a lot of conversation – I don’t think they are far off on the potential scope. [of controls]. “For example, the idea is to provide butter at an affordable price and make sure it is always available.”

Sources said this availability guarantee could mean brands or other more expensive lines would have to be discounted to a set price once cheaper varieties run out.

“The cost of doing something like this is enormous,” the source said. “It’s going to be a huge amount of work because we don’t sell all of our products. [version of a product] “Every store has it.”

One of the retail executives argued the government should focus on reducing “cost headwinds” because prize freezes were not “delivering the desired results”.

Sources said the plan could lower prices on about 20 items, but this was likely to have “unintended consequences on items that are not essential but may be in the hands of some families” as companies try to recover lost profits elsewhere.

The potential move comes after Prime Minister Rachel Reeves met with supermarket bosses last month to discuss growing concerns about the potential impact on the cost of living, including rising food prices, as a result of the Middle East conflict.

Reeves is scheduled to announce measures to help households make ends meet on Thursday, and she had hoped to announce the policy then. Officials at the talks said no agreement had yet been reached, according to the FT, which first reported the plan.

UK retailers, farmers and food producers have warned that without government help, prices could rise and food shortages could occur.

The SNP made an eye-catching price-fixing pledge when it released its Scottish Parliament election manifesto, which won it a record fifth term after winning 58 of Holyrood’s 129 seats.

The proposal, which retailers quickly dismissed as a ‘toilet trick’, could put the party at odds with the UK government as it could breach the 1998 Scotland Act, which created a two-party parliament.

UK government sources rejected the idea that Reeves was threatening to impose a government-mandated price cap like the SNP prefers, saying it would instead be a voluntary price freeze. They added that the talks were at an early stage.

A Treasury spokesman said: “The Prime Minister has made it clear that we want to do more to lower costs for families and we will set out more details in due course.”

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