Chancellor Rachel Reeves is to suspend agrifood tariffs on more than 100 food and drink staples as part of the government’s package of action to tackle inflation.
With industry insiders such as the Food and Drink Federation suggesting food price inflation could rise to as high as 10% by the end of the year due to the impact of the Iran war, Reeves is due to announce the package later today, alongside other giveaways such as free bus fares for children during August.
The full details around which products and ingredients will see import tariff cuts will be set out next week alongside the launch of a “business engagement exercise” by the Treasury. Targeted tariff suspensions would impact products including biscuits, chocolate and dried fruit and nuts.
The expected benefit to consumers was due to exceed £150m a year, the Treasury said, with the list taking into account domestic production and food security. It stressed the cuts would “not include any significant UK primary agriculture production”.
The move follows the removal of tariffs on the import of products including pasta, juices, tuna, oranges, peaches and other staples at the end of April until the end of 2028. The Treasury said this previous package would bring expected consumer benefits to the tune of £100m to £400m each year.
It comes as the government has already announced an extension of the 5p cut in fuel duty – due to expire in August – until the end of the year. Hauliers were also given a 12-month road tax holiday yesterday – reducing a renewal to £1 and saving £600 for a typical heavy lorry and £912 for the biggest vehicles.
Red diesel will also have fuel duty cut by over a third until the end of the year – the lowest rate in over 20 years, “helping to keep the cost of doing business down at a difficult time when red diesel prices are around 50% more than their pre-crisis levels”, said the Treasury.
However, contentious proposals to impose voluntary price capping on key supermarket items look to have fallen by the wayside following a fierce backlash from major retailers over the past 24 hours.
The Financial Times reported today that Reeves had “backed away from a radical proposal to cap the prices of essential groceries”.
Reeves was expected to avoid any mention of the much-derided plan “because of the ferocity of the reaction”, the FT said. M&S CEO Stuart Machin described the proposal as “preposterous” yesterday, with the majority of products in the firing line already voluntarily frozen in price and loss-makers for M&S.
“As the war in Iran pushes prices up at home, my economic plan is the right one,” Reeves said. “I will continue to make the right choices, to protect households and businesses, and build a stronger and more secure Britain.”
The announcement follows news overnight that the UK had signed a “historic” trade deal with the Gulf Cooperation Council, worth an estimated £3.7bn to the economy every year.
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