London, May 20, 2026, 11:58 BST
- Ministers said there won’t be mandatory price caps for supermarkets after reports surfaced that voluntary freezes on key staples were discussed.
- Stuart Machin at M&S called the idea “completely preposterous” and said taxes and regulation have been pushing up costs for retailers.
- UK headline inflation has eased, but the dispute is happening with food, fuel and supply problems tied to conflict all still in play.
UK backs away from mandatory supermarket price caps after retail pushback Downing Street stepped back from the idea of forcing supermarkets to cap food prices on Wednesday, after retailers pushed back and Marks & Spencer boss Stuart Machin called the idea “completely preposterous.” Exchequer Secretary Dan Tomlinson told BBC Radio the government will keep talking with supermarkets but is not planning a mandatory cap. Reuters
Cost of living is back in focus for politicians as prices keep rising. Reuters, citing a Financial Times story it later confirmed, reported that big grocery chains could be asked to hold down prices on basics like eggs, bread and milk if they get lighter regulation in return. Any price ceiling under the plan would not be forced on stores, with ministers insisting participation stays voluntary.
Inflation pulled back in April, but food costs are still tough for households. The Office for National Statistics said the Consumer Prices Index was up 2.8% on the year, easing from 3.3% in March. Food and non-alcoholic beverages climbed 3.0%, after a 3.7% rise in March. Grocery inflation ran at 3.8% in the four weeks to April 19, according to grocery data cited by Reuters.
Grocers have already been warning about rising costs from energy, freight, wages, packaging, and supply troubles tied to the Middle East conflict, making the reported plan a tough fit. Sky News reported the Bank of England has heard from businesses that expect food price inflation to hit 6% to 7% later this year. The Treasury said Chancellor Rachel Reeves would release more details on cost-of-living aid in due course.
M&S chief Machin said the company is already losing money on basics like milk, bread and baked beans, with eggs and sugar only bringing in thin margins. “I don’t think government should be trying to run business,” he said. Machin wants ministers to lower tax and ease regulation instead of interfering in the competitive market. The Guardian
The M&S boss said retailers are under a “triple whammy” from rising taxes, more regulation and global conflict. He put extra costs from the April packaging levy at £40 million, with another £10 million possible this year. National insurance will add £50 million more, or up to £100 million including supplier costs. The Guardian
M&S reported a 23.8% drop in underlying profit to £671 million for the year to March 28, with £131.3 million in costs from a cyber incident last year. Food sales grew 7%. Clothing, homewares and beauty sales slipped 7.7%. CFO Alison Dolan said disrupted stock flow hurt availability and led to deeper discounting in the second half. His comments followed the results.
M&S is still putting money into tech and 18 new food stores. Machin said the next three years were “critical” as the company works on automated distribution centres, refits clothing departments and leans more on AI in both marketing and sourcing. Food market share rose to 4.1%, or 4.6% counting sales from the Ocado partnership. The Guardian
The rest of the sector also spoke out. The British Retail Consortium, which represents big groups like Tesco and Sainsbury’s, said it was against price caps. Chief Executive Helen Dickinson said the government shouldn’t bring in “1970s-style price controls” and should look at the costs built into food pricing instead. Reuters
Tesco shares dropped nearly 3% at the open, making it the worst performer on the FTSE 100, while Sainsbury’s slid over 1.5% before trimming some of the loss. Former Sainsbury’s CEO Justin King told Sky News price controls would be like collusion, which he called illegal under UK competition law.
Ministers face the risk that a voluntary price freeze could shift costs around. The Guardian, citing retail sources, reported stores may end up discounting branded goods or more expensive lines if the cheapest options sell out. A supermarket source told the paper the workload to implement this would be “huge.” Reuters also quoted a source saying the plan could put investors off the UK. The Guardian
Reeves is getting ready with a fresh anti-profiteering plan targeting price gouging, which covers sharp price jumps seen as excessive during a crisis. Sky News reported that the Competition and Markets Authority and other regulators would get new powers to look into sudden increases and check company margins. The plan would let regulators “name and shame” firms for conduct seen as concerning. Sky News
Scotland’s food price fight stands out, with the Scottish National Party pitching a legal cap on “essential” foods. The UK government is pushing its negotiations with supermarkets as cooperative and market-driven. So far, no deals with grocers have been announced. Reuters
