The Treasury is reportedly urging supermarkets to limit food price rises as officials fear the Iran war will push up bills for households already struggling with the cost of living crisis.
The policy, which would be voluntary, would apply to common items such as bread, eggs and milk, as reported by the Financial Times.
In return, it’s expected the government would ease packaging regulations on supermarkets and potentially delay rule changes on healthy foods.
Millions of households across the UK are already being forced to skip meals and cut back on family visits as the cost of living crisis continues to bite.
Two-thirds of households (67 per cent) have altered their shopping or eating habits in the past month to reduce food expenditure, a survey last month showed.
But supermarket bosses branded the government’s idea “desperate” and “mad” and compared it to failed policies of the 1970s.
One executive said: “They’re so desperate to do something that’s going to combat the cost of living, but this doesn’t feel like the right way to be going about it.”
They said with other costs rising, such as taxes, fuel and energy, the plan risked pushing up prices for shoppers overall.
Sources told the Financial Times that the Treasury wanted supermarkets to voluntarily limit the prices of everyday items including eggs, bread and milk.
The British Retail Consortium, which represents supermarkets, said the policy would “force retailers to sell goods at a loss” and dismissed the policy as “1970s-style price controls”.
In Scotland, the Scottish National Party (SNP) has pledged a similar policy, which will require large supermarkets to limit the cost of up to 50 popular food items.
Sir Keir Starmer’s government is under pressure to tackle the rising cost of living as food prices continue climbing across Britain and there are concerns of a knock-on economic impact from the US-Iran war.
Last month’s poll showed 85 per cent of adults were now worried about soaring food prices – an increase from 83 per cent in February.
It found 15 per cent of households were going without certain foods, and one in 10 – equating to three million families – were skipping meals to manage their weekly budget.
The SNP has accused the Labour government of having “abandoned the ‘squeezed middle’” and urged chancellor Rachel Reeves to go “much further” to help struggling households.
Inflation eased last month, but household energy bills are forecast to jump from July when the regulator sets its next price cap.
A Treasury spokesperson said: “The chancellor has been clear we want to do more to help keep costs down for families, and will set out more detail in due course.”