The UK Treasury is considering asking supermarkets to cap the prices of essential food items as households continue to struggle with rising grocery bills.
But the plans have sparked a furious backlash from major retailers, who have branded the idea "rubbish" and compared it to failed policies from the 1970s.
According to four people familiar with the discussions, the Treasury wants supermarkets to voluntarily limit the prices of everyday staples including eggs, bread and milk.
In return, ministers are said to be offering incentives to retailers, which could include easing packaging regulations and delaying costly healthy food rule changes.
One source close to a supermarket described the plans as "a rubbish, knee-jerk reaction to the SNP", referring to the Scottish National Party’s recent proposal for mandatory price controls in Scotland.
Scottish retailers had already condemned the SNP’s policy as a "1970s-style" gimmick.
Sir Keir Starmer’s Government is under growing pressure to tackle the rising cost of living as food prices continue climbing across Britain.
Inflation on groceries reached 3.7 per cent last month, with industry figures cautioning that the figure could surge to 10 per cent owing to disruption from the Middle East conflict.
Supermarkets have been grappling with higher costs
| PAForeign Secretary Yvette Cooper has warned that the world is "sleepwalking into a global food crisis," with the ongoing war strangling supply chains.
The Chancellor met with supermarket executives last month following these alarming projections, though the session had to be rearranged after retail bosses objected to being summoned by the Treasury.
During that meeting, grocers urged ministers to tackle government policies they held responsible for driving up prices.
Rachel Reeves is due to unveil measures addressing household finances on Thursday, with Treasury officials keen for the price cap scheme to feature in her announcement.
The Treasury has also sought assurances that British farmers would not suffer reduced income as a result
| GETTYHowever, those familiar with the negotiations say no deal has yet been struck with retailers.
"It is a completely ill-thought-out, last-minute idea. The idea that the government can set price better than the market is for the birds," one individual involved in the discussions told the Financial Times.
Former Brexit minister Lord Frost weighed in on social media platform X, calling the proposal "remarkable (and remarkably bad) if true.
"There are certainly plenty of people in this govt whose understanding of economics is so poor that they might consider it a good idea."
The Treasury has also sought assurances that British farmers would not suffer reduced income as a result of any shop price controls.
Large grocers typically carry between 30,000 and 60,000 individual products
| PAUnlike the SNP's compulsory scheme covering up to 50 essential products, the Westminster proposal would remain voluntary.
SNP leader John Swinney has defended his party's approach, arguing he faces a "public health responsibility" to ensure affordable nutrition for people "struggling to afford a very basic shop."
Supermarkets have long maintained they operate on slim profit margins in Britain, though Tesco recently reported annual pre-tax profits climbing 8.5 per cent to £2.4billion against revenues of £66.6billion.
Large grocers typically carry between 30,000 and 60,000 individual products, with milk, bread, eggs, potatoes, butter and bananas among the most purchased items.