Could the government introduce a price cap on food? – MoneyMagpie
It has emerged that the government is planning to introduce a price cap on the price of basic food items. This is an attempt to battle soaring food costs as the cost-of-living crisis rages on.
An agreement with supermarkets and retailers – which would be voluntary – could see essentials such as bread and milk face a cap – and even a reduction – in price. Number 10 have said there will be no obligation for businesses to implement the cap.
With food inflation at the highest level for almost 45 years, hitting 19.1% in the year to April, could be a relief for many. Although it has eased a little, there is still a long way to go. However, the idea is receiving mixed reviews from experts and retailers alike.
Prime Minister Rishi Sunak has been warned his “1970s-style price controls” could cause food shortages and may not make much difference overall, with the British Retail Consortium (BRC) suggesting the plan “will not make a jot of difference”.
The BRC represents the UK’s largest supermarkets and says food prices are reflective of increased energy costs. Similarly, inflated transport and labour costs have contributed to these increases.
George MacDonald, executive editor at Retail Week, suggests a price cap on food could lead to controls on other essentials. He said: “Where would a price cap initiative end? If introduced there’s no logical reason to restrict them to food, there are plenty of other essential items that the less well-off sadly struggle to afford.
“Should products such as toiletries, cleaning materials and baby goods like nappies – all in high demand at the food banks that have grown as the cost of living has borne down on consumers – also come within the remit of a price-capping scheme?”
Interestingly, the food price cap model is based on one previously used in France and has already been put in place in Croatia and Hugary.
Last week, Chancellor Jeremy Hunt met with food manufacturers about the cost of food in the UK. In the meeting, Mr Hunt, ‘highlighted the widespread concern among the British public about the current level of food prices and their impact on household budgets’, with the meeting concluding with The Chancellor agreeing that food manufacturers should continue to engage with senior government ministers to take steps to ease pressures on consumers.
Many retailers are not happy with the proposals, suggesting many supermarkets are already facing losses to keep prices manageable for customers. Although some of the cost may be absorbed by businesses themselves, there’s no arguing food prices are causing serious strain to millions across the country.
Some people are welcoming the idea. On Twitter, user Susanna said: “We are living in a ridiculous era that everyone defends prices high as 17 % in food but won’t accept a price cap. If the supermarkets can’t do a reasonable pricing someone has to intervene.”
User Unity said: “Energy companies and food producers are profiteering! We need price caps!”
What are your thoughts? Let us know in the comments!