U.K. Treasury Discusses Price Freeze on Essential Foods with Supermarkets

The Treasury is discussing a voluntary price freeze on essential foods with supermarkets to limit the effect of higher energy costs linked to the closure of the Strait of Hormuz. Under the proposal, retailers would agree to hold prices steady on goods including eggs, bread and milk. In return, the government would consider suspending certain packaging and nutrition regulations.

The Bank of England has forecast that food prices could increase by as much as 7 percent by the end of the year due to higher energy costs and disruption to fertiliser exports. Yesterday the average price of a litre of petrol reached 158.5p, the highest level recorded since December 2022.

Reeves will announce measures on Thursday that include cancelling a planned 5p increase in fuel duty from September at a cost of £2.4 billion. The price-freeze plan itself will not be part of Thursday’s announcement. A supermarket source said the cost of regulation is enormous and questioned whether the government should seek to control what retailers charge.

The government is also considering giving regulators new powers to investigate price gouging and is preparing targeted support for households facing higher energy bills.