Voluntary price caps on staple foods will not work, retail chiefs have said – amid reports that the government is considering action to hold down the cost of living.
British Retail Consortium (BRC) said the proposals would not make a “jot of difference” to how its members priced goods.
Downing Street is understood to be drawing up plans that could see supermarkets asked to sign up to charge the lowest possible amount for some basic products like bread and milk.
The opt-in scheme, modelled on a similar agreement in France, would allow supermarkets to select which items they would cap, the Sunday Telegraph reported.
But it would stop short of full price controls that dictated what supermarkets and shops could charge.
Although down from 10.1% in March, the Consumer Prices Index of inflation remained stubbornly high at 8.7% in April, with food prices continuing to increase.
The proposals for a voluntary agreement to keep prices down were ridiculed by opposition MPs on Sunday, with critics comparing the plans to pricing controls introduced by Conservative prime minister Edward Heath in the 1970s.
A No 10 source said the proposals are at “drawing board stage” but stressed they would only be implemented at retailers’ discretion.
Andrew Opie, director of food and sustainability at the BRC, said: “This will not make a jot of difference to prices.
“As commodity prices drop, many of the costs keeping inflation high are now arising from the muddle of new regulation coming from Government.
“Rather than recreating 1970s-style price controls, the Government should focus on cutting red tape so that resources can be directed to keeping prices as low as possible.”
The reports come after Chancellor Jeremy Hunt backed a hike in interest rates – even if they risk plunging the UK into recession – in order to combat high inflation.
