Desperate Rishi Sunak is drawing up plans for supermarkets to cap the price of basic food items such as bread and milk.
No10 is increasingly worried the cost-of-living crisis gripping Britain could derail the Tories’ slim hopes of winning the next election.
Retail bosses have held talks with the Prime Minister and Chancellor in recent days, amid mounting pressure on family budgets.
Supermarkets have been forced to deny claims of profiteering and inflicting "greedflation" on customers.
The PM's advisors are now figuring out a deal with supermarkets for them to charge "the lowest amount possible".
Runaway inflation for food was at 19.1% in the year to April - savaging household finances and hitting poorer people harder as they spend a disproportionate amount of disposable income on essentials.
A No10 source said proposals were at a "drawing board" stage.
"The pressures are such that we are working with retailers on anything that can be done at their end to bring down prices for consumers,” they told The Sunday Telegraph.
While any agreement would be voluntary, the intervention would still amount to the biggest attempt to manage supermarket prices for 50 years.
Then PM Edward Heath set up price controls in 1973. Downing Street intervening in markets could trigger further anger among rebellious Tory backbenchers as it would be seen as anti-Conservative.
Ongoing inflation and increases in gilt yields are said to be throwing Mr Sunak's plans to cut personal taxes before the next general election into disarray.
Ten-year gilt yields are at 4.33%, only slightly lower than their peak at 4.54% following Liz Truss’s disastrous mini-Budget.
Mr Sunak is reportedly planning to speak about the state of the economy this week.
The cap on food prices would signal a move to a French-style agreement.
France's government made a deal with supermarkets in which shops identified items that would be subject to price freezes or reductions.
There are some fears that smaller shops could lose business to big supermarkets who are able to cut their prices.
Experts this week warned that although inflation has now dipped to 8.7% in the 12 months to April, prices are still going up, just at a marginally slower rate.
Financial educator Polly Arrowsmith, 56, tells the Mirror: "Inflation may go into single figures, but I remain highly cynical that it will feel like this to the average person."
Shadow Work and Pensions Secretary Jonathan Ashworth BBC1's Sunday with Laura Kuenssberg: “It’s extraordinary - Rishi Sunak is now like a sort of latter-day Edward Heath with price controls.”
He added: “Government could take action now to tame inflation.”
Health Secretary Steve Barclay said: “This is about having constructive discussions with supermarkets about how we work together, not about any element of compulsion.”
British Chambers of Commerce director-general Shevaun Haviland said: “No-one’s profiteering. It’s great to see them getting round the table with government to find new ways that we can help consumers - that’s a good thing.”
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