Downing Street is drawing up plans for retailers to introduce price caps on basic food items such as bread and milk to help tackle the rising cost of living, The Telegraph can disclose.
Rishi Sunak’s aides have started work on a deal with supermarkets akin to an agreement in France in which the country’s major retailers charge the “lowest possible amount” for some essential food products.
The move would amount to the biggest attempt to manage supermarket prices since controls established by Edward Heath in 1973. However, No 10 insists that any action by retailers would be voluntary.
It comes amid growing concern in government about sustained pressure on household finances from inflation and the rising cost of borrowing.
A Treasury source said: “Food inflation is much more resilient and difficult to get rid of than we anticipated.”
The Telegraph can also disclose that continued inflation and increases in gilt yields are throwing into doubt Mr Sunak’s aspiration to cut personal taxes before the next general election.
Official data published last week showed core inflation in the UK economy, which strips out volatile food and energy prices, increased to 6.8 per cent in April, its highest level in 31 years.
Ten-year gilt yields are at 4.33 per cent, having peaked at 4.54 per cent, following Liz Truss’s mini-Budget.