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Chancellor Jeremy Hunt will have food companies, energy suppliers and banks in his sights when he meets regulators on Wednesday to discuss ways to address the cost of living crisis.
Hunt will ask Britain’s key watchdogs whether there is evidence of price gouging by companies and if so what they intend to do about it to help households, according to the chancellor’s allies.
The meeting comes after the UK’s leading supermarkets on Tuesday backed the case for more transparency on fuel prices for consumers, as they denied profiteering from food inflation.
Britain is contending with an extended period of high inflation. The headline rate remained stuck at 8.7 per cent in May, according to official data, while mortgage costs have also risen sharply, further weighing on household finances.
Hunt is said by colleagues to be mainly focused on the cost of food, energy prices for business customers and the pace at which banks are passing on higher interest rates to savers.
He is also seeking information on other sectors including mobile phones and broadband. A report by Deutsche Bank analysts published on Tuesday said UK consumers had since April experienced the largest price increases in Europe for both mobile and fixed-line phone services.
Prime Minister Rishi Sunak this month warned retailers about pricing “responsibly and fairly”, saying household weekly shopping bills had “gone up far too much in the past few months”.
Some Conservative MPs want Hunt to offer direct help to struggling families — by giving tax breaks to mortgage holders, for example — while Labour has accused him of being soft with the banks.
But Hunt has told colleagues he will resist “siren calls” for higher public spending, which he claims will fuel inflation, and instead wants to give “political cover” to regulators to stamp out any sign of profiteering.
The chancellor will ask the Competition and Markets Authority, the Financial Conduct Authority and the regulators for energy, water and telecoms if they have seen evidence of problems and what action they are taking.
“He wants to find out if there’s a problem,” said one Treasury insider. “We are not instructing them — they are independent regulators.” However, Hunt hopes to convey strong political backing for their work.
The chancellor will not propose further powers for regulators, although the FCA will have a new tool from August 1 to put pressure on banks to pass on higher interest rates to savers when a new “consumer duty” on financial services companies to help customers comes into effect.
Meanwhile, executives from Tesco, J Sainsbury, Asda and Wm Morrison on Tuesday told MPs they would support an online scheme that would require petrol stations to share live fuel prices with customers in England.
This would be similar to existing arrangements in Northern Ireland and would help consumers to secure the best deal at the pumps after a surge in petrol and diesel prices since Russia’s full-scale invasion of Ukraine.
The CMA said last month that supermarkets had become less price competitive at the pumps after an investigation into the retail fuel market. The big four supermarkets own about half of the UK’s garage forecourts.
“We would welcome more transparency on price and fuel,” Gordon Gafa, commercial director of Tesco, told the House of Commons business select committee.
Asked if they agreed with the competition regulator’s findings that retailers’ profit margins on fuel had increased over the past four years, executives at Tesco and Morrisons said they believed that was the case.
David Potts, chief executive of Morrisons, said: “I think there is a bit more profit on fuel.”
Supermarkets have been accused by some MPs and trade unions of failing to rein in soaring food prices.
The supermarket executives rejected claims they were profiteering from food inflation and pushed back against allegations of being a “cartel”.
“The UK retail market is the most competitive market in the world,” said Kris Comerford, Asda’s chief commercial officer.
Gafa said Tesco made about 4p profit for every pound spent by the consumer, adding the market was “the most competitive we’ve ever been”.
Food inflation stood at 14.6 per cent in June, down from 15.4 per cent in May, according to the British Retail Consortium, the trade body.
