Reeves food tariffs policy will ‘barely touch the sides’ on supermarket prices
Food manufacturers and retailers have slammed Rachel Reeves’ cost of living measures, claiming the government’s loosening of food tariffs will do little to help supermarkets to cut prices.
The Chancellor urged supermarkets to pass on savings from the stripped tariffs to shoppers “in full”, but retailers fear this measure will “barely touch the sides”, City AM can reveal.
Reeves was attacked by leading UK grocers earlier this week after it emerged she had urged supermarkets to sign up to voluntary price caps on certain staple foods.
Treasury urged to cut energy bills
Announcing a package billed as “Great British Summer Savings” on Thursday, the Chancellor told MPs the measures were intended to ease a cost of living squeeze worsened by the Iran war. She said she was suspending tariffs on more than 100 foods sold in supermarkets — from biscuits and chocolate to nuts — and that she expected retailers to pass the savings on to customers in full.
The Treasury estimates the move will save British shoppers between £230m and £370m a year. Officials argue the suspension is the fastest lever available to bring down the cost of the weekly shop before the summer.
Cutting tariffs alone will do little to offset the rising costs that supermarkets are facing, retailers warned. Andrew Opie, British Retail Consortium
Industry groups countered that ministers should focus instead on the cost of energy, business rates and packaging levies, which they argue do far more to push up shelf prices than the tariffs now being suspended.
One senior grocery executive said the headline figure flattered the policy, because the duties affected only a narrow band of products and a fraction of a typical basket. “It’s welcome, but it won’t move the dial on a family’s monthly bill,” the executive said.
Manufacturers added that input costs — energy, freight and packaging — remained the dominant pressure on prices, and that without action on those the savings risked being swallowed before they reached the till.
The Treasury said it would keep the suspension under review and did not rule out extending it to further product lines if retailers demonstrably passed the savings through to shoppers.