Prices of milk, eggs and bread could be frozen over Iran war fears

The suggestion that supermarkets could limit grocery prices has sparked outrage from the food industry.

Cost-of-living fears are growing despite UK inflation falling back to its lowest level in more than a year, driven by a drop in energy prices that has offset skyrocketing fuel costs due to the war in Iran.

In a bid to tackle rising prices, Chancellor Rachel Reeves and the Treasury are said to have asked major supermarkets

In exchange, supermarkets would be offered incentives, including relaxing packaging policies and delaying potentially costly changes to healthy food rules, the Financial Times reports.

An average household might have to dish out an extra £200 on its food bill by the end of the year, according to the latest prediction by the Food and Drink Federation.

However, the retail and supply chain industry has hit out at the suggestion, saying it would be just a sticking plaster.

Phil Pluck, the chief executive of the Cold Chain Federation, labelled the rumoured government move ‘incredulous.’

He told the BBC Today program: ‘For the government to say can you identify eight or ten goods where we can cap the price on a voluntary basis is like trying to put a plaster over what is quite a deep wound, and it simply wouldn’t work.

‘The consequences would be almost negligible to the UK consumer.’

Helen Dickinson, the chief executive of the British Retail Consortium (BRC), said: ‘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.

She continued: ‘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.’

Dickinson argued that the UK has the most affordable groceries in Western Europe because of competition between supermarkets.

The Treasury is said to have asked supermarkets to guarantee that British farmers would not lose income from any prie caps, the FT reports.

Reeves is expected to reveal a cost-of-living support package this week to help keep costs down for families, the Treasury said.

Chancellor Rachel Reeves said: ‘The war in Iran is not our war but one we will need to respond to, and the decisions I took in the Budget last year have kept inflation down as we deal with global instability.

‘We have the right economic plan, and to change course now would risk our economic stability and leave working people worse off.

‘We have already taken £117 off energy bills, frozen rail fares, and lifted the two-child limit, and over today and tomorrow I’ll set out the next phase of how we will support UK households.’

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