Faced with galloping inflation and soaring food prices, British Prime Minister Rishi Sunak wants to offer basic necessities "at the lowest possible price". According to information from the Telegraph, the members of his cabinet are currently negotiating with the main British retail groups, so that the latter offer a selection of so-called “essential” products capped at a maximum price. Or a kind of “anti-inflation basket”.
Clearly inspired by the French model, the plan of the tenant of 10 Downing Street would be to launch “an anti-inflation quarter” in supermarkets in the United Kingdom, which would choose the products concerned by a price freeze themselves. A last resort solution in this country, where food prices rose 19.1% in the year to April, a near record level in the country. “Inflation is out of our control,” confirmed a senior government official to the Telegraph, who is worried about the success of this project in the face of opposition from large retailers.
But at this stage, there is no question of imposing anything on the distributors, who are moreover standing against the project. In a statement, the British Retail Consortium (BRC) - backed by Tesco, Sainsbury's, Morrisons and Waitrose - assured that Rishi Sunak's proposal "would make no difference to household purchasing power" and accused the Prime Minister of "returning to the price controls of the 1970s". At that time, the government, then led by Prime Minister Edward Heath, had, in order to cope with inflation, decided to freeze the prices of mass distribution products, wages and rents. Without success.
And fears arise from all sides: some fear that small stores will lose customers to the benefit of large supermarkets, the only ones able to reduce their prices, while others are already anticipating a phenomenon of "empty shelves", with the fear of possible shortages. "The fiercely competitive food market in the UK has helped keep prices in the country among the most affordable of all major European economies," said Andrew Opie, food director. and Sustainable Development of the BRC, believing that "the government should instead focus on bureaucratic and administrative simplification in order to free up enough resources to keep prices as low as possible".
It remains to be seen whether these discussions – which are still in their infancy – lead to this project, which the British government claims is still “under study”. This would at least reinforce the policy of Rishi Sunak - described as "desperate" by the British tabloids - while he carries at arm's length the objective of reducing inflation by half, to maintain it around 5% , by the end of 2023. An ambition shared by his finance minister, Jeremy Hunt, who reaffirmed on Sky News on Friday that his economic priority was the fight against inflation, “even at the cost of a recession" in the UK.
Asked about the further tightening of interest rates by the British central bank, in the wake of figures indicating a slowdown in inflation in April less marked than expected, Jeremy Hunt regretted that inflation is such a "source of instability”. Before launching, ready to draw an interventionist policy: "if we want (...) growth and reduce the risk of recession, we must support the Bank of England (BoE)".