Government ministers are in discussions with supermarkets about ways to reduce pressure on household budgets, but they will not force retailers to cap the price of staple foods such as bread, milk and eggs.
Several supermarket sources told the BBC that ministers had encouraged retailers to voluntarily freeze the cost of essential groceries. In exchange, businesses could see some regulations relaxed.
Speaking on Wednesday, Treasury Secretary Dan Tomlinson confirmed talks had taken place with the supermarket sector regarding measures to help households manage the cost of living.
The discussions follow proposals from the Scottish National Party (SNP), which last month pledged to introduce mandatory price caps on selected essentials in Scotland. The Government’s approach differs by focusing on voluntary agreements rather than legal limits.
Fresh inflation figures show food prices rose by 3% in April compared with a year earlier, exceeding the wider inflation rate of 2.8%.
Industry groups have warned food inflation could accelerate further, potentially nearing 10% by the end of the year. Some organisations argue that Government measures, including increases to the National Living Wage and employers’ National Insurance contributions, have pushed up costs across food supply chains.
Others point to global pressures, including rising fertiliser and animal feed prices. Disruption to shipping routes through the Strait of Hormuz following tensions involving the US, Israel and Iran has also added to supply concerns.
The debate comes as the Chancellor advances plans to strengthen the Competition and Markets Authority’s (CMA) powers. The regulator will gain faster investigatory powers and the ability to publicly identify businesses that significantly increase profit margins during economic shocks or crises.
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