“Why price caps and price gouging powers are the wrong answer to the grocery crisis"- says Balanced Economy Project

With the government said to be weighing options on grocery prices, Claire Godfrey, Executive Director of the Balanced Economy Project, says that neither price caps nor new CMA powers address what is actually wrong with grocery markets.

"Reports suggest the UK government is considering capping prices on grocery staples or leaning on retailers to limit costs voluntarily, alongside possible new powers for the CMA to tackle price gouging. Price caps, voluntary or otherwise, carry real risks of shortage or substitution. 

Hungary tried a blanket grocery cap in 2022 and the people hit hardest were those least able to afford it, while the big supermarkets could absorb it far more easily. Capping prices and price gouging powers are a second-best option at best, and risk becoming the political answer that lets government off the hook. Neither touch the real problem, which is about concentrated markets and a handful of dominant firms that can use their market power to protect their own margins at the expense of suppliers and consumers."

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