UK supermarkets are being urged by the government to limit food prices in return for easing regulations.
As first reported by The Financial Times, the price caps are 'voluntary' and would apply to key groceries – such as eggs, bread, and milk - according to retail industry sources with knowledge of the plans.
In return, the government has said it would offer “incentives” to the supermarkets, which the people said could include easing packaging policies and potentially delaying costly changes to rules around healthy food.
As one may well expect, supermarkets are understood to be strongly opposed to the plans.
The Treasury has declined to comment.
The proposals come as Sir Keir Starmer’s government is battling to address public concern over the cost of living.
Scottish retailers recently condemned a similar policy by the Scottish National Party as a “1970s-style” gimmick.
One person close to a supermarket said the Treasury’s initiative was “a rubbish, knee-jerk reaction to the SNP”.
UK food inflation rose to 3.7 per cent in April, and the foreign secretary, Yvette Cooper, has warned the world is “sleepwalking into a global food crisis”, with the Middle East war throttling supply chains.
And in line with the magical thinking, the Treasury has also told supermarkets that it would like guarantees that British farmers would not lose income from shop price caps.
Former Brexit minister Lord Frost weighed in on social media platform X, calling the proposal "remarkable (and remarkably bad) if true.
"There are certainly plenty of people in this govt whose understanding of economics is so poor that they might consider it a good idea."
SNP leader John Swinney has defended his party's approach, arguing he faces a "public health responsibility" to ensure affordable nutrition for people "struggling to afford a very basic shop."
“It is a completely ill-thought-out, last-minute idea . . . The idea that the government can set price better than the market is for the birds,” one person familiar with the discussions told the FT.