Hunt is urging supermarkets to curb soaring prices

Jeremy Hunt is stepping up pressure on the food sector to rein in soaring prices, ahead of data showing food is increasingly playing a bigger role in high inflation than energy.

The UK chancellor will meet food manufacturers on Tuesday to ask the industry to help ease pressure on household budgets, after a similar meeting between the chief secretary to the exchequer and major supermarkets earlier this month.

But the UK government has rejected the case for introducing price controls, as some European governments have done, or for following France’s lead with a looser deal aimed at limiting supermarkets’ prices on certain essential products.

Instead, the Treasury said on Monday night that the chancellor would “ask food manufacturers to do everything they can to support consumers” and would consider reforming pricing rules to allow consumers to more easily compare the prices of similar products.

Hunt will meet later in the day with the independent Competition and Markets Authority, which is investigating specific pricing practices as part of the food sector work that began earlier this year. The CMA is also close to concluding a study into supermarket road fuel prices.

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“High food prices are proving to be stubborn, so we need to understand what causes them. . . I am asking the industry to work with us as we halve inflation,” Hunt said.

Official inflation data due on Wednesday is likely to show a big fall in headline inflation, from 10.1 percent to 8.4 percent, if the Bank of England’s forecasts are correct, due to a sharp rise in energy prices. The effect of April 2022 is excluded from the annual calculation.

Jeremy Hunt

UK Chancellor Jeremy Hunt will meet food manufacturers on Tuesday to ask the industry to help ease pressure on household budgets © TOLGA AKMEN/EPA-EFE/Shutterstock

But food prices, which have already risen 19.1 percent in the past year, are likely to rise for some time to come.

The Resolution Foundation said last week that this means food price shocks now overtake energy price shocks as the biggest pressure on family finances. The think tank warned that it was unclear “whether the scale of the increase was understood in Westminster”.

Some MPs and unions have accused supermarkets of being in the business of “profiteering” and not cutting back on supermarkets even when prices of raw materials start to fall on the world market.

But Bank of England officials do not believe such “greed” is behind the UK’s persistently high inflation, with non-energy corporate profit margins as a percentage of GDP at their lowest since 2009.

Both Tesco and Sainsbury’s reported lower profits in the last financial year, and some analysts point to supermarket price cuts on staples such as milk as evidence of easing food inflation.