The UK government’s reported push for the country’s retailers to cap the prices of staples has been met with fierce criticism.
Reports in The Daily Telegraph and The Financial Times said yesterday (19 May) the UK Treasury had asked grocers to voluntarily introduce limits on the price of products including bread, eggs and milk.
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In return, the publications said, an offer had been put forward to ease regulations in the areas of packaging and healthier food.
As a UK government minister told UK broadcasters today the move “is not something we’re looking at”, industry figures hit out at the idea.
“Government needs to focus on the root causes of rising food inflation, not the symptom. We don’t believe the answer is a price cap and it’s not clear to us how those proposals would work in practice,” a spokesperson for UK trade body The Food and Drink Federation said.
According to data issued today by the Office for National Statistics, prices of food and non-alcoholic drinks in the UK rose by 3% in April, easing from the 3.7% recorded in March.
Stuart Machin, the chief executive of UK food retailer Marks and Spencer, said the reported idea of food price caps was “completely preposterous”.
Speaking to reporters after M&S published annual financial results that included a 7% rise in food sales, Machin said: “I don’t think government should be trying to run business. They should try to understand business better. There is so much in the government’s control. My advice is to try to reduce tax and regulatory burden and free us up in a very competitive market.”
The British Retail Consortium, which represents retailers in the UK, echoed Machin’s comments.
“The challenge facing retailers is a combination of higher energy and commodity costs resulting from the Middle East conflict, and the soaring cost of the government’s domestic policies. 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 chief executive Helen Dickinson said.
Speaking to the BBC today, UK Treasury Minister Dan Tomlinson sought to play down yesterday’s reports. “This rumoured story on caps on food prices, I can be really clear with you, is not something we’re looking at,” he said.
Last month, The Scottish National Party set out its plans for food price caps. In the party’s manifesto ahead of the elections to the devolved Scottish Parliament earlier this month, the SNP said it would introduce “legal price ceilings on a basket of essential food items”.
The SNP won the most seats in those elections and yesterday party leader John Swinney defended the plans.
Grocery industry research group IGD said today its surveys showed concerns about food prices are at the highest level for three years among UK shoppers.
IGD chief economist James Walton said the slowing rate of UK food inflation in April was due to a delay in the spike in input costs sparked by the Middle East crisis moving through the supply chain.
“There are signs that the conflict in the Middle East is beginning to have an effect in the supply chain, as farmers are having to contend with higher diesel prices now and the possibility of raised fertiliser prices next season,” Walton said. “With this in mind, one of our most recent forecast scenarios put food inflation between 4.3-5.3% as an average over 2026.”
Veteran UK grocery industry Clive Black said it was “perplexing to say the least” that the UK Treasury appeared to be looking for caps on food prices.
“The hypocrisy of one of the biggest sources of UK food inflation, the Treasury, asking for voluntary price cuts is flabbergasting,” Black, head of consumer research at Shore Capital, said.
“The 2024 Labour government has been a major source of food price inflation in the UK in the 2020s, plus the decimation of much of the food and beverage sector, not least through the increase in National Insurance Contributions, the National Living Wage, Extended Producer Responsibility and a truly massive regulatory framework.”
He added: “Trading margins are low and have been at best stable for British supermarkets in recent times, capital returns in truth are derisory, for an industry which is well renowned in international circles for being brutally competitive.”
