Rishi Sunak is reportedly set to ask retailers to place price caps on basic foods items, such as bread and milk, in an attempt to battle skyrocketing food inflation.
Downing Street aides are plotting a deal with supermarkets, similar to an agreement in France, where consumers are charged the lowest amount possible for food staples it is claimed.
“Food inflation is much more resilient and difficult to get rid of than we anticipated,” a Treasury source told The Sunday Telegraph. The newspaper claims that talks with retailers were at the “early stages”.
If implemented, No 10 will hope the plan will aid consumers in a cost of living crisis who have been hit simultaneously by high energy prices and soaring food prices.
The skyrocketing cost of food has seen UK inflation ease at a slower rate than expected in April, continuing the pressure on squeezed households incomes.
The Office for National Statistics said Consumer Prices Index (CPI) inflation fell to its lowest level for more than a year last month, at 8.7 per cent down from 10.1 per cent in March, as energy prices stabilised after sky-high rises a year ago.
But it was higher than forecast by economists, who had pencilled in a drop to 8.2 per cent in April, and more than the Bank of England had predicted just two weeks ago.
The figures showed food inflation at 19.3 per cent, down only slightly on March’s eye-watering 19.6 per cent and remaining close to the highest rate for more than 45 years.
Chancellor Jeremy Hunt admitted last week that food prices are “still rising too fast”.
It comes after MPs have urged ministers last week to reveal if they are considering “controls” to stop supermarkets unfairly profiting from food inflation.
In the Commons, Conservative MP Michael Fabricant urged ministers to ensure “supermarkets don’t take unfair advantage and excess profits from wholesale prices”.
He told MPs: “My constituents in Lichfield and Burntwood and indeed the rest of the country are enduring high food inflation, as indeed they are in the rest of Europe.
“But what controls have we got, if that is the word, to ensure that supermarkets don’t take unfair advantage and excess profits from wholesale prices?”
Environment minister Mark Spencer replied: “Retailers work to ensure strong competitive pressure remains in the marketplace, however the Competition and Markets Authority (CMA) announced last week that they are looking into the grocery sector to see whether any failure in competition is contributing to prices being higher than would be normally.”
Additional reporting by PA
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