Plans for supermarket price caps on basic food as health secretary Steve Barclay details 'opt-in' scheme

The government is discussing plans to encourage supermarkets to bring in price caps on food staples to help with the rising cost of living.

The opt-in scheme would see price reductions on basic food items like bread and milk at major retailers.

Food prices increased by 19.1% in the year to March, placing additional pressure on families – with economists warning it is set to overtake energy bills as the ‘epicentre’ of the cost of living crisis.

But health secretary Steve Barclay said there would be no ‘element of compulsion.’

The scheme, modelled on a similar agreement in France, would allow supermarkets to select which items they would cap, the Sunday Telegraph reported.

It could mark the biggest intervention on pricing since controls introduced by Edward Heath in the 1970s, the paper reported – though No 10 stressed any scheme would be voluntary.

Asked about the proposals on the BBC’s Sunday With Laura Kuenssberg programme, Barclay said: “My understanding is 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.”

Barclay acknowledged small family-run businesses would themselves be under “significant pressure” and stressed that the plans were “not about any element of compulsion”.

Fears rising food costs will overtake energy as the 'epicentre' of the cost of living crisis — Fears rising food costs will overtake energy as the ‘epicentre’ of the cost of living crisis

A No 10 source said the proposal is at “drawing board stage” but would not involve Government-imposed price controls.

It comes after chancellor Jeremy Hunt backed interest rate hikes – even if they risk of plunging the UK into recession – in order to combat soaring inflation.

Although down from 10.1% in March, the Consumer Prices Index of inflation remains stubbornly high at 8.7% in April.

Andrew Opie, director of food and sustainability at the British Retail Consortium, said: “This will not make a jot of difference to prices.

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

“Yet despite this, the fiercely competitive grocery market in the UK has helped to keep British food among the most affordable of all the large European economies.

“Supermarkets have always run on very slim margins, especially when compared with other parts of the food supply chain, but profits have fallen significantly in the last year.

“Even so, retailers continue to invest heavily in lower prices for the future, expanding their affordable food ranges, locking the price of many essentials, and raising pay for staff.

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

“Rather than recreating 1970s-style price controls, the Government should focus on cutting red tape so that resources can be directed to keeping prices as low as possible.”