Rishi Sunak has been warned his plan for 1970s-style price caps will lead to food shortages amid backlash from ministers and supermarkets.
Downing Street plans to ask retailers to agree to price caps on some basic goods such as bread and milk in an effort to lower food prices and tackle inflation.
But the proposal has been condemned by major supermarkets and has angered at least two cabinet ministers, who said it would involve too much interference in markets and could lead to shortages if suppliers take their goods abroad.
A minister told The Telegraph that price caps, last applied in Britain in the 1970s, would not work “in this day and age” and that products would be “sold elsewhere” if supermarkets refused to raise their prices.
Tesco, Sainsbury’s, Morrisons and Waitrose backed a statement from the British Retail Consortium (BRC) saying the scheme, first revealed in The Telegraph, “will not make an iota of difference to prices” and accused Mr Sunak of “recreating the style of the 1970s”. price controls”.
A retail boss said: “It’s a nonsensical idea, and rather than trying to intervene in supermarket pricing, the government would be better off addressing the root causes of inflation.”
Sunak has set himself the goal of halving inflation to five percent by the end of 2023 and has asked the Treasury to find ways to lower prices after a sharp rise in the cost of living caused by the war in Ukraine.
The pledge is seen as central to the Conservatives’ pitch to the public at the next general election and prompted Jeremy Hunt, the Chancellor of the Exchequer, to admit he would accept a UK recession if it reduced inflation .
‘You can’t interfere in markets’
The latest figures show inflation has fallen from 10.1 percent to 8.7 percent since Sunak made his pledge, but ministers worry he has become a hostage to fortune.
Food prices rose 19.1 percent in the year to April, a near-record high.
“The problem is that we don’t have inflation under control,” a senior government leader said on Sunday night.
Mr Sunak’s plan mimics a similar one in France, where retailers have pledged to freeze prices in an effort to create an “anti-inflation quarter” between April and June, and are being audited to make sure they keep their put pressure on suppliers.
E.Leclerc, a hypermarket chain, refused to participate in the plan, arguing that it would create the impression that the prices of other goods would rise to make up for the shortfall.
Michel-Edouard Leclerc, the CEO, said he would “prefer to be cheaper across the board”.
Multiple government sources doubted the policy would ever be implemented in the UK after backlash from ministers and retailers.
A minister said: “There is an international market for wheat and it is quite expensive after what happened in Ukraine. If you push the price of bread down, it can be sold elsewhere.
“You can’t interfere with markets, that doesn’t work in this day and age. We live in global markets and it’s very different from what happened in the 1970s and after the war.”
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