‘Urgent action’ will be taken to ease burden of high prices, Hunt insists

The Chancellor called in the chiefs of the main economic watchdogs on Wednesday for crisis talks about protecting people from the impact of inflation.

Jeremy Hunt said called in the chiefs of the main economic regulators on Wednesday for crisis talks (Aaron Chown/PA) (PA Wire)

Jeremy Hunt insisted an agreement has been reached with watchdogs to “act urgently” to help consumers amid concerns about stubbornly high prices.

The Chancellor called in the chiefs of the main economic regulators on Wednesday for crisis talks about protecting people from the impact of soaring inflation.

In a statement released after the meeting, the Treasury said the Competition and Markets Authority (CMA) will bring forward publication of its review on fuel pricing to Monday.

It will also give an update on competition and unit pricing in the grocery sector earlier in July than previously planned, the department said.

We are working hard to halve inflation this year and return to the 2% target. Businesses must play their part too and I will keep a watchful eye on the progress they make

Chancellor Jeremy Hunt

Meanwhile, the Financial Conduct Authority (FCA) will report by the end of July on how the savings market plans to ensure higher interest rates are passed on by leading banks and building societies.

A follow-up meeting will be held later this summer, the Treasury said, ahead of which regulators have agreed to provide it with regular updates.

The FCA, Ofcom, Ofwat and Ofgem will also publish a joint statement to set shared expectations on treatment of customers in financial difficulties.

The CMA also agreed to “further scrutinise” the food supply chain as part of efforts to help shoppers pay fair prices, the Treasury said.

It will provide an update on housebuilding and work in the rented accommodation sector in August following concerns about affordability.

Ofcom said it will “take action to push suppliers” to put customers first as prices fall and profits return following the meeting.

Mr Hunt said in a statement: “I am pleased we’ve secured agreement with the regulators to act urgently in areas where consumers need most support to ensure they are treated fairly.

“We are working hard to halve inflation this year and return to the 2% target. Businesses must play their part too and I will keep a watchful eye on the progress they make.”

At Prime Minister’s Questions, Mr Sunak told MPs: “The Chancellor met with all the economic regulators this morning and they will be making an announcement later about their plans to ensure fairness of pricing and supply chains to ease the burden on consumers.”

Around five hours after Mr Sunak’s promise and eight hours after the meeting, the Treasury released details of the meeting.

Sarah Cardell, CEO of the CMA, said the body was “unrelenting” in its commitment to promote open and competitive markets, and insisted it would continue to invest “heavily” in scrutinising “issues economy-wide.”

An Ofgem spokesperson said: “Ofgem will (take action) against suppliers who don’t put their customers first as prices fall and profits return.”

It comes as Britons have witnessed rampant inflation through sharp jumps across a raft of their household bills, at the same time as they swallow soaring mortgage costs due to higher interest rates.

Shortly after the Treasury published details of the Chancellor’s meeting, Mr Hunt spoke to Conservative MPs about the UK economic situation.

Addressing the 1922 Committee of backbench Tories, a party source said the Chancellor stressed the need to “stay the course” and “do all we can to halve inflation, eventually reaching 2%, the Bank of England’s target”.

“He told them we need to stay focused on halving inflation. That remains the top priority,” the source told reporters after the Commons meeting.

“Thatcher knew it and all successful Tory administrations have known it: cutting inflation is absolutely critical.”

Tory chairman Greg Hands also updated MPs on efforts to hold on to seats in the upcoming by-election battles, including in former prime minister Boris Johnson’s Uxbridge and South Ruislip seat.

The Tory source said the message to MPs was that “this is not 1997, Keir Starmer is not Tony Blair”.

Meanwhile, Downing Street insisted water companies should not “disproportionately” pass on costs to consumers for upgrade works.

Firms are drawing up plans to increase household water bills by up to 40%, according to The Times.

The Prime Minister’s official spokesman said: “We expect companies to put the interests of customers first and that means delivering key improvements in infrastructure and tackling issues like sewage … without disproportionately impacting people’s bills.”

Households have already witnessed a particularly sharp spike in energy prices during the cost-of-living crisis, with the Government’s Energy Price Guarantee currently limiting the bill of a typical house to £2,500.

The average bill for households had been limited to almost half this, at £1,277, as recently as March last year. Nevertheless, bills are set to drop from next month as wholesale price decreases filter through.

Communication regulators at Ofcom are also facing scrutiny over mid-contract price increases of up to 17.3% for millions of mobile phone and broadband customers.

Meanwhile, rises in commodity prices and labour costs have also pushed the cost of food sharply higher, with the latest figures from the Office for National Statistics indicating food prices in May were 18.4% higher than the same month a year earlier.

Mr Sunak has previously warned retailers about pricing “responsibly and fairly”, saying household weekly shopping bills had “gone up far too much in the past few months”.

Supermarkets insisted in a committee hearing with MPs on Tuesday that they were not profiteering, with Tesco claiming the group was the “most competitive we have ever been”.

The accusations of profiteering have sparked a backlash from the industry, with the British Retail Consortium, the trade body representing the sector, saying there had been a “regular stream of price cuts” by supermarkets despite experiencing “extremely tight” profit margins.

It followed official figures last week that showed Consumer Prices Index inflation failed to ease as hoped in May, remaining at 8.7%.

The Bank of England subsequently raised interest rates to a 15-year high last week in a shock move designed to tame inflation.