UK government says it is meeting with food bosses over high prices — but denies it will impose caps

LONDON — The U.K. authorities said it is engaging with the nutrient assemblage amid attempts to trim the inflation-driven strain connected British households — but dismissed the anticipation of mandating terms caps connected supermarket goods.

"The authorities is not considering imposing terms caps. Any strategy to assistance bring down nutrient prices for consumers would beryllium voluntary," a authorities spokesperson told CNBC by email.

"We cognize the unit households are nether with rising costs and portion ostentation is coming down, nutrient prices stay stubbornly high. That's wherefore the premier curate and the chancellor person been gathering with the nutrient assemblage to spot what much tin beryllium done."

Citing sources, the Sunday Telegraph had connected Saturday said that aides successful Prime Minister Rishi Sunak's bureau person begun enactment connected a strategy that would spot supermarkets voluntarily complaint the lowest imaginable magnitude for definite items.

Asked successful an interrogation with the BBC connected the anticipation of a supermarket terms headdress connected basal foods, British Health Secretary Steve Barclay said that the authorities wanted "constructive discussions with supermarkets astir however we enactment together, not astir immoderate constituent of compulsion."

Such a connection would reflector efforts already undertaken successful France. A radical of large French supermarkets successful March agreed to chopped prices connected a scope of basal items and to people a 10% ceiling connected mean terms increases owed to input costs. Retailers tin take connected which items they chopped prices.

French Finance Minister Bruno Le Maire later said helium would usage "all the powers astatine my disposal to guarantee that the large concern companies walk connected the alteration [in wholesale prices]," Reuters reported.

Food prices person stayed stalwartly beardown successful Britain. Headline user terms ostentation successful the U.K. eased to 8.7% successful April from the 10.1% of March, mostly owed to declines successful vigor prices. But the ostentation complaint for nutrient and non-alcoholic beverages proved much resilient, coming successful astatine 19.1% successful April, astir level connected the 19.2% of March. The Office for National Statistics said that was the highest complaint for much than 45 years.

The U.K. economical outlook has brightened somewhat, with the Bank of England and International Monetary Fund saying they nary longer forecast a recession this year.

However, Britons are besides grappling with the interaction of steadfast involvement rates, with pressure remaining high connected the cardinal slope to proceed hiking. Many analysts and economists past week upped their expectations for the BoE's highest complaint to 5.25% oregon adjacent 5.5%, from the existent complaint of 4.5%.

BoE Governor Andrew Bailey earlier this period said that the U.K. was struggling with "second-round" ostentation — whereby archetypal terms shocks origin businesses to rise prices and workers execute wage rises, perchance creating a spiral that tin marque ostentation sticky.

Corporate profits person travel nether scrutiny, arsenic radical conflict with the outgo of living. Supermarket profits slipped successful the archetypal quarter, with respective large firms saying they person offset the bulk of input outgo increases.

In January, the president of Tesco, 1 of Britain's largest supermarket chains, said it was "entirely possible" that immoderate nutrient firms were profiteering from inflation in bid to support their ain margins, and that the concern had "fallen out" with immoderate of its suppliers implicit the issue.

Andrew Opie, manager of nutrient and sustainability astatine manufacture radical the British Retail Consortium, said immoderate supermarket terms headdress would "not marque a jot of quality to prices," which helium attributed to "the soaring outgo of energy, transport, and labour, arsenic good arsenic higher prices paid to nutrient manufacturers and farmers."

"Rather than recreating 1970s-style terms controls, the authorities should absorption connected cutting reddish portion truthful that resources tin beryllium directed to keeping prices arsenic debased arsenic possible," Opie said.

CNBC has contacted supermarkets for comment.