UK Considers Food Price Caps to Combat Inflation Surge

UK store prices are rising at a record pace, with food inflation dipping slightly to 15.4% in May, but still the second-highest rate on record. Prime Minister Rishi Sunak is considering drastic measures, including price controls, to keep inflation in check. Poor households are being hit the hardest, with more people using food banks than ever before. The Bank of England has been caught off guard by stubbornly high food prices, which seem to have barely responded to 12 successive interest rate hikes. Sunak is considering asking retailers to cap the price of essential food items, in a throwback to the 1970s, but economists say that capping prices encourages companies to produce less of a product, while making it more attractive to consumers. Brexit is responsible for about a third of UK food price inflation since 2019, according to researchers at the London School of Economics.