Get you up to speed: Prices of milk, eggs and bread could be frozen over Iran war fears | News UK
Supermarkets in the UK are being asked by Chancellor Rachel Reeves and the Treasury to cap prices on staples like milk, bread, and eggs amid rising cost-of-living concerns. The measures aim to protect British farmers’ incomes while responding to inflation pressures linked to the ongoing conflict in Iran.
The Treasury has requested supermarkets to cap prices on essential items while ensuring British farmers’ incomes are protected. Rachel Reeves is expected to announce a cost-of-living support package this week to address rising consumer costs.
Chancellor Rachel Reeves stated that she will announce a cost-of-living support package this week aimed at alleviating household expenses. The British Retail Consortium has warned against ‘1970s style price controls,’ urging the government to address public policy costs contributing to rising food prices.
What remains unclear — It is uncertain how the proposed price caps will affect farmers’ income if implemented.
Supermarkets may cap prices of milk, eggs and bread amid inflation concerns
Supermarkets could limit food prices from going up by capping groceries like bread and milk.
Cost-of-living fears are growing despite UK inflation falling back to its lowest level for more than a year, pushed by a drop in energy prices which has offset the skyrocketing fuel costs due to the Iran war.
In a bid to tackle rising prices, Chancellor Rachle Reeves and the Treasury are said to have asked major supermarkets to cap the prices of milk, bread and eggs.
In exchange, supermarkets would be offered incentives like relaxing packaging policies and delaying potentially costly changes to healthy food rules, the Financial Times reports.
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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 industry has called on the government to steer clear of ‘1970s style price controls.’
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.
Are you worried about affording your food shop?
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.’
What is the UK inflation like?
The latest Consumer Price Index, which measures the average change in prices paid by consumers over time, fell to 2.8% in April.
This is down from 3.3% in March, and the lowest level since March last year.
The drop took analysts by surprise as the drop was expected to be 3%.
One of the biggest drivers of this was the energy price cap for households using electricity and gas, which kicked in from April.
But the respite could be short-lived as inflation is set to surge back up because of the Iran was and the blockade of the Strait of Hormuz continuing to hamper fuel prices.