LONDON, May 19 (Reuters) – Britain’s finance ministry is
pressuring major supermarket groups to introduce voluntary price
caps on key products, such as eggs, bread and milk, in return
for easing some regulations, according to two people with
knowledge of the situation.
Confirming a Financial Times report that the ministry had
proposed relaxing some new packaging rules and possibly delaying
changes to rules around healthy food in exchange for price caps,
the people said the grocers had reacted with anger and were
pushing back.
The proposals come as Prime Minister Keir Starmer’s
government seeks to address an ongoing cost of living crisis and
follow a similar move by the Scottish National Party, which
holds power in Scotland’s devolved parliament.
“If this happened, nobody would invest in the UK,” one of
the people said.
“If you want food price inflation to decline, you need to
start looking at the cost of regulation on business,” they said,
highlighting the government’s moves to raise employer taxes, the
national minimum wage, introduce new packaging levies and
propose the reformulation of thousands of food lines.
A spokesperson for the British foreign ministry said: “The
chancellor (Rachel Reeves) has been clear we want to do more to
help keep costs down for families, and will set out more detail
in due course.”
British grocery inflation was 3.8% in the four weeks to
April 19, according to researcher Worldpanel by Numerator.
The Bank of England said that businesses it had spoken to
last month expected food price inflation to reach 6% to 7% later
this year, reflecting the economic fallout from the Iran war.
The British Retail Consortium, which represents Britain’s
major supermarket groups, including market leader Tesco
and Sainsbury’s, said it opposed price caps.
“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,” BRC CEO Helen
Dickinson said.
(Reporting by James Davey, additional reporting by Alistair
Smout
Editing by Gareth Jones)
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