Rachel Reeves’ food tariff cuts have been branded insufficient by industry bodies, who warn the policy will do little to lower supermarket prices amid the cost of living crisis.
Food manufacturers and retailers have criticised Rachel Reeves’ cost of living measures, arguing that the government’s decision to relax food tariffs will do little to enable supermarkets to reduce prices.
The Chancellor has encouraged supermarkets to pass on the savings from the reduced tariffs to customers “in full,” but retailers are concerned that this measure will “barely touch the sides,” according to City AM.
Earlier this week, Reeves faced backlash from leading UK grocers after it was revealed she had called on supermarkets to agree to price caps on certain foods. On Thursday, while announcing a series of “Great British Summer Savings”, Reeves informed MPs that she was taking action to curb the escalating cost of living brought about by the Iran war.
She stated: “I know that the cost of the weekly shop is often one of the biggest worries for families. So last month, I met with supermarkets to urge them to do all they can to keep prices low.”, as reported by City AM.
“And today I am taking action by suspending tariffs on over different 100 foods sold in supermarkets. And I am clear that I expect supermarkets to pass these savings on in full to their customers.”
Treasury urged to reduce energy bills
The Treasury has indicated that this measure will impact foods such as biscuits, chocolate and nuts and could save British shoppers between £230m and £370m annually. A list of the affected products will be published next week.
However, a prominent trade body representing British supermarkets has condemned the proposals and called on Reeves to do more to assist grocers in lowering prices for shoppers.
Andrew Opie, director of food and sustainability at the British Retail Consortium, told City AM: “To support shoppers, the government should focus on the UK’s farmers, food producers and retailers by cutting energy bills.
“While any assistance is welcome, cutting tariffs alone will barely touch the sides in offsetting the rising costs supermarkets face.”
The Food and Drink Federation (FDF), which represents the UK’s 1,200 food producers, suggested that the government should reduce tariffs on raw ingredients rather than finished products to bolster British manufacturers.
Reeves should cut ‘burdensome’ red tape
Karen Betts, the FDF’s chief executive, said: “This is a well-intentioned attempt to help keep a lid on food price inflation. But removing tariffs on products that businesses make here in the UK undermines rather than supports those businesses and the people they employ.
“Instead, government should remove tariffs on ingredients and address the root causes of food inflation, including by rigorously prioritising burdensome regulation. Otherwise, this risks benefiting overseas manufacturers at the expense of our domestic food system.”
The Treasury chose not to comment.
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