MercoPress. South Atlantic News Agency

British government mulls food price cap; retailers skeptical of impact

The idea of a cap or freeze on basic food items, as first reported by the Daily Telegraph, is said to be at the “drawing board stage”.

The British Government's plans to introduce a cap on the price of basic food items will not help tackle the rising cost of living, retailers have warned. The British Retail Consortium (BRC) said the measures would not make a “jot of difference” and could thwart efforts to cut inflation.

According to a BBC report, a voluntary agreement with major retailers could see price reductions on basic food items like bread and milk. But there are no plans for a mandatory price cap, No 10 sources have stressed.

The idea of a cap or freeze on basic food items, as first reported by the Daily Telegraph, is said to be at the “drawing board stage”.

Supermarkets are expected to be allowed to select which items they would cap and only take part in the initiative, modeled on a similar agreement in France, on a voluntary basis.

But there is some doubt over what impact a price cap would have, with the scheme facing criticism from retailers and opposition Mps.

Labor's shadow work and pensions secretary Jonathan Ashworth compared the plans to pricing controls introduced by Conservative prime minister Edward Heath in the 1970s.

The BRC, a trade association which advocates on behalf of more than 200 retailers, said the government should focus more on cutting red tape so resources could be “directed to keeping prices as low as possible”, rather than “recreating 1970s-style price controls”.

“This will not make a jot of difference to prices,” Andrew Opie, director of food and sustainability at the BRC said.

“High food prices are a direct result of the soaring cost of energy, transport, and labor, as well as higher prices paid to food manufacturers and farmers,” he added.

“As commodity prices drop, many of the costs keeping inflation high are now arising from the muddle of new regulation coming from government.”

Health Secretary Steve Barclay told BBC One's Sunday with Laura Kuenssberg program that the policy was “not about any element of compulsion”.

“The government is working constructively with supermarkets as to how we address the very real concerns around food inflation and the cost of living, and doing so in a way that is also very mindful to the impact on suppliers,” he said.

It comes days after Sainsbury's boss Simon Roberts denied that his supermarket had been profiteering.

He told the BBC that supermarkets had spent money to “battle inflation” and avoid passing all of the rising costs onto consumers.

The Consumer Prices Index of inflation was 8.7% in the year to April, with food prices rising by 19.1 % in the same 12-month period - its second highest rate in 45 years soaring prices of some food products have meant inflation has not come down by as much as many predicted.