The government’s plan to encourage supermarkets to introduce voluntary price caps on staple food items to help reduce the cost of living has faced fierce opposition from retailers.
Downing Street is understood to be drafting proposals advocating the lowest possible charges for some basic products such as bread and milk.
But the British Retail Consortium (BRC) said the measures would have “no impact” on pricing, and warned they could hamper efforts to bring inflation down.
The opt-in scheme, modeled on a similar agreement in France, would allow supermarkets to choose which products they want to restrict, The Sunday Telegraph reported.
It was mocked by opposition MPs on Sunday, who compared the plan to price controls introduced by Conservative Prime Minister Edward Heath in the 1970s.
A No. 10 source said the proposals were at the “drawing board stage”, but stressed they would only be implemented at the discretion of retailers.
“The government is not considering price caps. Any scheme to help consumers lower food prices is voluntary and at the discretion of retailers,” a government spokesman said.
“We know households are under pressure from rising costs and while inflation is coming down, food prices remain high. That’s why the Chancellor has been meeting with the food sector to see what else can be done.
“We continue to support households with our £94bn package, worth an average of £3,300 per household this year and last.”
The optional aspect of the plan led critics to question whether it would have any impact on costs, with the Institute of Economic Affairs (IEA), a right-wing think tank, branding it a “senseless stunt”.
Andrew Opie, director of food and sustainability at the BRC, said: “It won’t have a big impact on prices.
“As commodity prices fall, many of the costs of keeping inflation high now come from the mess of new regulations introduced by the government.
“Instead of recreating 1970s-style price controls, the government should focus on cutting red tape so resources can be directed to the lowest possible prices.”
Julian Jessop, an economics fellow at the IEA, said: “Food price caps are at best a pointless gimmick and at worst, harmful to the very people they are supposed to help.
“It’s not even certain that capped goods will end up being less expensive than they would be without a cap.”
Chancellor of the Exchequer Jeremy Hunt previously backed a rate hike – even if it risks tipping Britain into recession – to fight soaring inflation.
CPI inflation remained stubbornly high at 8.7% in April, although down from 10.1% in March.
