The UK Government is pushing UK supermarkets to cap food prices in exchange for easing packaging policies, according to multiple reports.
The Treasury’s proposals, first reported by the Financial Times, would involve voluntary price freezes on essential goods, such as bread, milk, and eggs, in return for the easing of packaging regulations and a potential delay to rules around healthy food.
Ahead of the Holyrood elections on 7 May, the SNP pledged to introduce mandatory caps on supermarket prices for essential goods.
UK food price inflation rose sharply earlier this year, hitting 3.7% in April, after the US and Israel launched airstrikes against Iran. The war in the Middle East is impacting supply chains around the world as transport through the key Strait of Hormuz waterway is effectively blocked.
The British Retail Consortium (BRC), which represents major supermarket groups including Tesco and Sainsbury’s, reacted angrily to the Treasury’s proposals, telling the BBC the policy would ‘force retailers to sell goods at a loss’.
The Deputy Head of the Scottish Retail Consortium described the SNP’s promise to cap prices on essential goods as a ‘gimmick’ that could have a ‘damaging impact’ on the UK’s food system.
Despite warnings from industry, Tesco, the UK’s biggest supermarket, saw its profits rise by 8.5% to £2.4bn for the 2025-26 financial year, as sales rose by 4.3% to £66.6bn.
A potential packaging policy that could be eased is the UK’s Extended Producer Responsibility scheme for packaging (pEPR).
As part of the scheme, businesses must register and report data about the packaging they supply or import, and cover the costs of managing household packaging waste.
The pEPR policy provides funding to local authorities to drive improvements in recycling, with £1.4 billion being reinvested back into recycling infrastructure in the first year of the scheme.
Dan Cooke, Director of Policy, Communications and External Affairs at the Chartered Institution of Wastes Management (CIWM), called for the fundamentals of pEPR to remain in place.
“The current system has rightly placed emphasis on packaging producers to ensure greater recyclability and pay for the treatment of stuff they put on the market, instead of expecting local authorities and households to foot the bill on their behalf,” Cooke told Circular Online.
“Packagers and retailers had a free ride for too long and placed more and more composite and unnecessary and unrecyclable material onto markets and expected the recycling and waste sector to sort things out.”
“We cannot now undo sound principles and practice, or disincentivise good practice that has clear long-term social and economic benefits.”
Despite the policy aiming to shift the financial burden of packaging disposal onto producers, figures from retail industry leaders show that over 80% of pEPR costs are likely to be passed onto customers.
The Chancellor Rachel Reeves is set to announce measures to support households with the rising cost of living on Thursday (21 May).
