UK Seeks Cap on Food Prices as Consumers Struggle

The British government wants supermarkets to cap food prices amid rampant inflation.

U.K. health secretary Steve Barclay said Sunday (May 28) that ministers were in discussions with retailers to “address the very real concerns” many Britons have about food inflation and the cost of living, the Financial Times (FT) reported. 

According to the report, the notion of supermarkets instituting voluntary controls on the price of staple foods came out of a meeting between Chief Secretary to the Treasury John Glen and retailers earlier this month amid government concerns about runaway food inflation.

Government data for last month showed the inflation rate for food and nonalcoholic drinks at 19.1%, with food surpassing fuel as the largest contributor to the U.K.’s inflation.

The FT report said the government proposal would see supermarkets agree to a cap on prices for bread, milk and other essentials, along with their private-label products. A government official told the FT there were no plans to force stores to cap food prices.

“The critical thing is any scheme would be voluntary and for retailers to take up,” the official said. “We recognize retailers operate on low margins. But we are acutely aware of the cost-of-living squeeze people feel. So we are talking to retailers about what can be done to keep prices as low as possible.”

While inflation in the U.S. hasn’t reached the same levels as the U.K., consumers on this side of the pond are still cutting back at the grocery store. Recent research by PYMNTS finds that 47% of shoppers have switched to a less expensive merchant for at least one grocery item, with 33% trading down for personal care products and 32% buying less costly snacks. 

Meanwhile, data from PYMNTS’ recent study “How the World Does Digital: Daily Digital Engagement Hits New Heights,” which draws from a survey of more than 17,500 consumers in the 11 markets that make up half the world’s GDP, digital engagement overall rose 2.4% year over year in the first quarter of 2023. However, digital engagement in grocery grew just 1.7%.

Some of this muted growth could be due to consumers’ caution when shopping for groceries amid ongoing economic challenges, especially since price-conscious consumers tend to choose brick-and-mortar retailers, as Barbara Connors, vice president of commercial insights at 84.51°, the marketing insights subsidiary of Kroger, told PYMNTS last fall.

“We know that very price-sensitive customers are those that have lower engagement with eCommerce and are lower on the adoption curve, and those are the customers that are most likely to go into a store,” Connors said. “And one of the reasons is because they are looking for sales, deals and coupons, and it is easier for them to do that in-store than online.”