A new plan that encourages supermarkets to impose price caps on essential groceries will not be made mandatory, a Cabinet minister has admitted.
Government proposals are being drawn up that would urge retailers to cap the amount shoppers pay for staples like bread and milk.
The idea behind the plans is to help deal with the cost-of-living crisis and sees big stores being asked to charge as little as possible for everyday household products.
This would allow supermarkets to decide for themselves which items to limit, under an opt-in system modeled on a similar agreement in France.
If implemented, it would be the largest intrusion into pricing since Edward Heath introduced controls in the 1970s.
But Health Secretary Steve Barclay said the system was entirely voluntary and “without coercion” and that the government was unable to control the prices set.
A No.10 source said the proposal is still in the “draft stage”.
Asked about the proposals on the BBC’s Sunday With Laura Kuenssberg programme, Mr Barclay said: “I understand the Government is working constructively with supermarkets to address the very real concerns of food inflation and the cost of living, and doing so in. “ a way that also takes the impact on suppliers very much into account.”
Acknowledging that small, family-run businesses are under “considerable pressure” themselves, he stressed that the plans were “not about any coercion”.
This comes after Chancellor Jeremy Hunt backed interest rate hikes – albeit those that could plunge the UK into recession – to combat rising inflation.
Jonathan Ashworth, Secretary of State for Shadow Work and Pensions, said the proposal was “extraordinary”.
He told Laura Kuenssberg, “Rishi Sunak is now kind of like a modern-day Edward Heath with price controls.”
“We have an inflation problem, and the reason we have such an inflation problem in this country is because we haven’t invested in sustainable energy for 13 years, we’ve reduced our gas storage and we haven’t improved the labor supply .
“We could take action right now to get inflation under control and let our economy grow, but instead Jeremy Hunt is saying, ‘Oh, we might have to go into a recession’, like, you know, unemployment, unemployment, people lose.” Their homes are worth a price to pay.
“The government could now take action to curb inflation.”
The consumer price index remained stubbornly high at 8.7% in April despite a 10.1% drop in March, while experts have warned alarmingly expensive groceries will overtake energy bills as the ‘epicenter’ of the cost-of-living crisis.
Food prices are expected to continue rising after already rising 19.1% in the year to March, putting additional pressure on families.
Earlier this week, energy regulator Ofgem announced a sharp reduction in the energy price cap, which caps the amount energy companies can charge per unit of energy.
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