Rachel Reeves Urges UK Supermarkets to Pass Full Food Tariff Savings to Shoppers
Government Measures and Industry Response to Food Price Pressures
Reeves Calls for Supermarkets to Pass on Tariff Savings
LONDON, May 21 (Reuters) - British finance minister Rachel Reeves on Thursday told supermarkets to pass on savings from reduced food tariffs in full to consumers, as she seeks to ease pressure on household budgets.
Prime Minister Keir Starmer, facing a potential leadership challenge after local election defeats earlier this month, is pushing departments to shield households from rising prices due to fallout from the Iran war.
Reeves set out several measures, including a move to cut tariffs on more than 100 types of food products including biscuits, chocolate and dried fruit and nuts.
"I am clear that I expect supermarkets to pass these savings on in full to their customers," Reeves told parliament. "I will not tolerate any company exploiting the current situation to make excess profits at consumers' expense."
Food Price Cap Policy and Industry Backlash
Government Retreats from Price Cap Proposal
FOOD PRICE CAP RETREAT
On Wednesday, the finance ministry backed away from a proposal for price caps on key products, such as eggs, bread and milk, following a furious response from retailers.
Retailers' Criticism of Price Caps
Marks & Spencer CEO Stuart Machin called the idea "completely preposterous", while former Asda chairman Stuart Rose labelled it "idiotic".
Machin said many retailers, including M&S, already sold staples such as milk, bread and bananas at a loss, adding that easing tax and regulatory pressures on the sector would do more to curb food inflation.
Current Trends and Future Outlook for Food Inflation
Recent Data on Food Inflation
Official data on Wednesday showed food inflation eased to 3.0% in April.
Machin said that demonstrated that food retailers are "taking a big responsibility" to try and minimise passing through cost increases to consumers.
Forecasts for Food Price Rises
Bank of England and Industry Warnings
However, the Bank of England has said firms it spoke to last month expect food inflation to reach 6% to 7% later this year, while the Food and Drink Federation has warned that food prices will be rising by almost 10% by December.
(Reporting by James Davey and Sam Tabahriti; editing by Sarah Young)
