The chancellor is set to unveil measures aimed at shielding the public from “unfair price rises” following Sir Keir Starmer’s suggestion to bolster the competition regulator’s powers against profiteering.
Rachel Reeves will outline her proposed actions in a statement to MPs on Tuesday.
Her plans were first presented to the prime minister and other colleagues during an emergency Cobra meeting held on Monday afternoon.
“The chancellor set out the steps she will take tomorrow – in a statement to parliament – that will help protect working people from unfair price rises,” Downing Street said in a readout.
Those will include an “anti-profiteering framework” to detect and crack down on companies exploiting the Middle East crisis and help the Competition and Markets Authority (CMA) root out price gouging.
It comes after Sir Keir highlighted concerns over surging oil and fuel costs.
Earlier on Monday, he said was looking at giving the CMA “further teeth” so it can better protect consumers and that the government needs to “bear down” on price gouging.
This could involve giving regulators “time-limited, targeted powers”.
The Treasury, Department for Business and Trade and regulators are working “at pace” on what those powers could be.
A government spokesperson said: “We are fighting your corner to keep the cost of living down in these uncertain times.
“We will not allow companies to exploit this crisis to hike their prices to unjustifiable levels.
“Whether at the fuel pump filling up your car or at the till paying for your groceries, we are working with regulators to make sure the price you pay is a fair one.”
Sir Keir earlier played down the prospect of fuel rationing, saying the government had no “meaningful concerns about energy supplies” while acknowledging that the price “fluctuates daily” as he answered questions from MPs at the liaison committee.
It came as the latest figures showed diesel prices hit a three-year high amid the ongoing Iran conflict.
He was asked about calls from Richard Walker, his cost of living tsar, for short-term intervention to stop energy companies and petrol retailers benefiting excessively from the conflict in the Middle East.
Lord Walker wrote in The Sunday Times that he had asked the government to consider a temporary profit cap “to stop producers and retailers exploiting the crisis to make windfall profits at the expense of consumers”.
Sir Keir said: “I’ve just seen him to say we need to discuss those proposals urgently together, but we are looking at measures to deal with profiteering.
“I’ve already asked the CMA to look at this, I think we might look at what further teeth we can give the CMA to deal with this.
“I think there isn’t enough regulation in this area.
“I want to see more on price gouging or profiteering.
“We absolutely need to bear down on it, and so we’re actively considering whether the CMA should have additional powers to deal specifically with that, but at the moment, we’re making sure they’re focused on anti-profiteering steps that they can take.”
Figures from the RAC showed the average price of unleaded fuel has risen more than 14p a litre to 147.19p since the end of February, adding £8 to the cost of filling up a family car which currently stands at £81, the RAC said.
Petrol prices were last this high in early June 2024, it added.
For drivers of diesel vehicles, the situation is “far worse” with a litre up 29p to 171.17p, its highest price since mid-January 2023.
This means a tank now costs £94, £16 more than it did at the start of the Middle East conflict.
RAC head of policy Simon Williams said: “Given how many rely on their cars, households are really feeling the effects of the conflict in the Middle East.
“As a barrel of oil has been trading well over $100 for the last three days and looks set to remain at that level, drivers are in for a rough ride at the pumps in the run-up to the Easter break with no end to price increases in sight.
“With the price of petrol likely to go above 150p a litre in the next week and diesel heading to 180p, it’s looking like it will be the most expensive Easter on the roads since the early days of the war in Ukraine in 2022.”
The AA reported strong fuel stocks across the UK on Monday and said it had seen no spike in breakdowns from drivers being out of fuel and no supply concerns during its patrols.
Edmund King, AA president, said: “The AA advises that drivers should continue to fill up as normal and can use sites such as The AA app to find the best prices.”
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