On Wednesday, Jeremy Hunt, the chancellor, will hold meetings with industry regulators, including the Competition and Markets Authority (CMA), as well as the watchdogs for energy, water, and communications. The purpose of these meetings is to discuss the issue of companies taking advantage of rampant inflation by increasing prices. A Treasury source stated that Hunt will specifically inquire about whether there is profiteering in these sectors and what actions are being taken to address it.
These meetings were prompted by the Bank of England’s suggestion that some retailers are either raising prices or failing to pass on lower costs to consumers as a way to boost profit margins amidst stubborn inflation. Prime Minister Rishi Sunak has also warned retailers to price their products in a responsible and fair manner, citing the significant increase in household weekly shopping bills in recent months.
Hunt has confirmed that ministers are engaging in discussions with the food industry to explore potential measures that can alleviate the pressure on consumers. However, these remarks have faced criticism from the British Retail Consortium, who argue that despite extremely tight profit margins, supermarkets have consistently implemented price cuts.
Official figures from last week revealed that the consumer prices index inflation remained at 8.7% in May, failing to ease as initially anticipated. In response to this, the Bank of England unexpectedly raised interest rates to a 15-year high in an effort to combat inflation. Sunak has urged financially strained individuals to remain resilient in light of these high interest rates, emphasizing that there is no alternative when it comes to curbing inflation.
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Hunt defends the Bank of England’s rate hike, despite the added pressure it places on mortgage holders. However, in response to the mortgage crisis, the chancellor has collaborated with banks to introduce measures such as allowing borrowers to extend their mortgage term or temporarily switch to interest-only plans.
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