The UK Treasury is in discussions with major supermarkets about voluntarily capping prices on essential food items, offering regulatory concessions in return, the Financial Times (FT) reported.
Under the arrangement being discussed, retailers would identify a range of staples, including eggs, bread and milk, and commit to holding prices steady as the government looks to relieve household cost-of-living pressures.
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In return, the government is understood to be considering relaxing certain packaging requirements and potentially deferring changes to rules governing healthy food advertising, measures that currently contribute to Treasury revenues.
Officials are additionally seeking assurances that any shop-level price controls would not erode income for UK farmers.
The talks are expected to feed into an upcoming announcement by Chancellor Rachel Reeves, who is preparing to outline further steps to help households manage living costs.
However, people close to the negotiations cautioned that no deal has yet been signed.
A Treasury spokesperson told Retail Insight Network: “The Chancellor has been clear we want to do more to help keep costs down for families, and will set out more detail in due course.”
The response from supermarkets has been cool.
One individual close to a retailer reportedly dismissed the plan as “a rubbish, knee-jerk reaction to the SNP”, drawing parallels with a comparable proposal put forward by the Scottish National Party – itself condemned by Scottish retailers as a “1970s-style” gimmick.
A key distinction, however, is that the UK Government’s version would be voluntary rather than mandated.
The pressure comes against a backdrop of rising food costs.
UK food inflation reached 3.7% in April, and Reeves held talks with supermarket executives last month after industry figures warned that inflation could surge to as high as 10%, driven by supply chain disruption linked to the Iran war.
That meeting had initially been delayed after retailers took issue with how they were called to attend.
In a separate development, Reeves is expected to give competition watchdogs what the Treasury has described as “rapid investigatory powers” to probe alleged price gouging by energy firms during the Iran war-triggered crisis.
Large UK supermarkets typically stock between 30,000 and 60,000 product lines.
Tesco, the country’s biggest grocer, recently posted an 8.5% increase in annual pre-tax profits to £2.4bn ($3.21bn) on revenues of £66.6bn, even as the industry has long argued it operates on tight margins.
