UK finance ministry presses supermarkets to cap food prices, sources say
Government Pressure on Supermarkets and Industry Response
(Corrects reference to finance ministry from foreign ministry in paragraph 6)
Finance Ministry's Proposal for Voluntary Price Caps
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.
Regulatory Concessions in Exchange for Price Caps
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.
Context: Cost of Living Crisis and Political Background
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.
Official Statements and Economic Data
Finance Ministry's Position
A spokesperson for the British finance 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."
Food Price Inflation Trends
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.
Supermarket and Retail Industry Reaction
British Retail Consortium's Opposition to Price Caps
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 Credits
(Reporting by James Davey, additional reporting by Alistair SmoutEditing by Gareth Jones)
