The UK Government is drawing up proposals to ask retailers to charge the lowest possible amount for some basic products like bread and milk.
The opt-in scheme, based on a similar agreement in France, would allow supermarkets to select which items they would cap.
It has been compared to pricing controls introduced by Edward Heath in the 1970s to curb inflation - but Downing Street has stressed any initiative would be voluntary.
Tory minister Steve Barclay said: “My understanding is the Government is working constructively with supermarkets as to how we address the very real concerns around food inflation and the cost of living, and doing so in a way that is also very mindful to the impact on suppliers.”
Barclay acknowledged small family-run businesses would themselves be under “significant pressure” and stressed the plans are “not about any element of compulsion”.
A No 10 source said the proposal is at “drawing board stage” but will not involve Government-imposed price controls.
Shadow work and pensions secretary Jonathan Ashworth said: “It is extraordinary. Rishi Sunak is now like a sort of latter-day Edward Heath with price controls.”
It comes after Chancellor Jeremy Hunt backed interest rate hikes – even if they risk of plunging the UK into recession – in order to combat soaring inflation.
Although down from 10.1% in March, the Consumer Prices Index of inflation remained stubbornly high at 8.7% in April, while experts have warned alarmingly expensive food is set to overtake energy bills as the “epicentre” of the cost-of-living crisis.
Food prices are expected to keep rising, having already increased by 19.1% in the year to March, placing additional pressure on families.
Andrew Opie, director of food and sustainability at the British Retail Consortium, said: “This will not make a jot of difference to prices.
“High food prices are a direct result of the soaring cost of energy, transport, and labour, as well as higher prices paid to food manufacturers and farmers.
“Yet despite this, the fiercely competitive grocery market in the UK has helped to keep British food among the most affordable of all the large European economies.
“Supermarkets have always run on very slim margins, especially when compared with other parts of the food supply chain, but profits have fallen significantly in the last year.
“Even so, retailers continue to invest heavily in lower prices for the future, expanding their affordable food ranges, locking the price of many essentials, and raising pay for staff.
“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.”
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