The Treasury has privately urged Britain’s largest supermarkets to voluntarily freeze prices on essential groceries—including eggs, milk and bread—in a bid to curb soaring food inflation that hit 3.7% in April. In return, retailers could see reductions in packaging and healthy-eating regulations currently under review.

Sources close to the discussions describe the proposal as a sharp U-turn from the government’s previous hands-off approach to grocery pricing. The move comes as Chancellor Rachel Reeves prepares to scrap a planned 5p increase in fuel duty in September, part of a wider package aimed at easing household financial strain. Similar plans were floated by Scotland’s SNP government last month, which proposed capping up to 50 staple items, including bread, cheese and milk.

Retailers have reacted with fury, branding the intervention a “1970s-style policy” that risks distorting market dynamics. The British Retail Consortium warned that price caps could lead to shortages or reduced product quality, while the Food and Drink Federation called the idea “simplistic and ineffective” in addressing inflation’s root causes.

Labour insiders insist the move is a targeted intervention to protect low-income families, who spend nearly 15% of their disposable income on food. “This isn’t about price controls—it’s about preventing profiteering during a cost-of-living crisis,” said a senior Treasury official. The government also faces growing pressure over energy bills, with analysts forecasting a £209 rise in July, a figure seized on by Conservative leader Kemi Badenoch as a “failed promise.”

Meanwhile, global tensions are escalating after NATO signalled plans to deploy a mission to the Strait of Hormuz by July, aiming to reopen the critical shipping lane even without a US-Iran peace deal. The strait handles one-fifth of the world’s oil and liquefied natural gas shipments, and its closure has sent energy prices soaring. “The Strait of Hormuz is the jugular vein of the global economy,” said a NATO diplomat. “We cannot afford to let it stay choked.”

The Treasury’s food price proposal arrives as Labour seeks to regain momentum after a rocky start to its term. The move follows the SNP’s earlier announcement of a 50-item price cap in Scotland, which covers staples like bread, milk and cheese. “We’re seeing a race to the bottom on grocery prices,” said a retail analyst. “But the real question is whether capping prices will actually solve the problem—or just shift the pain elsewhere.”

1. First — The Treasury’s plan targets milk, eggs and bread, staples accounting for 12% of the average household’s food budget.
2. Second — Retailers warn of potential supply chain disruptions if margins are squeezed too tightly.
3. Third — The SNP’s cap proposal covers up to 50 items, including meat, pasta and baby formula.

As the debate intensifies, economists warn that price caps could backfire by reducing competition or encouraging smuggling across borders. “History shows that when you interfere with price signals, you get unintended consequences,” said a former Bank of England policymaker. “The last time Britain tried this, it led to empty shelves and black markets.”

• 📊 Food inflation has outpaced overall inflation for 18 consecutive months.
• 🔍 The Treasury’s proposal includes a review clause allowing caps to be lifted if inflation falls below 2%.
• ⚠️ Supermarkets may pass regulatory savings to shareholders instead of lowering prices.

The government’s next move will be closely watched, with some analysts predicting a compromise: a temporary cap on just three to five staples, rather than a blanket freeze. For now, retailers are holding firm, with one supermarket CEO telling officials: “You can’t regulate your way out of a cost crisis.”