BANK of England chief Andrew Bailey has hit out at the idea of imposing voluntary price caps on essential goods.

The Governor’s warning shot to the Treasury came as officials held talks with stores over staples such as milk, egg and bread prices being frozen.

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The Bank of England has hit out at the idea of imposing voluntary price caps on essential goods Credit: Getty

‘If you start doing it as a matter of course you are artificially moving prices relative to costs. That’s not a sustainable thing in the long run’, says Governor Andrew Bailey Credit: AFP

The discussions centred on incentivising supermarkets to making the move which would then trigger the easing of regulations on packaging and healthy food.

But Mr Bailey said: “The question you have to think through is are you doing it for some well grounded, temporary reason?”

Speaking to the Treasury select committee, he added: “If you start doing it as a matter of course you are artificially moving prices relative to costs. That’s not a sustainable thing in the long run.”

But Rachel Reeves last night told The Jattvibe: “We will not be imposing prices on the supermarkets.

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“But it is right when people are struggling with the cost of the weekly shop and, given the conflict that is raging in the Middle East, that we work with the supermarkets to ensure that we try and keep the costs for them down.

“So they can pass those costs on, those reduced costs on to their customers.”

M&S boss Stuart Machin said he had received “no direct communication” from ministers about the idea.

He said: “It’s completely preposterous. I don’t think the Government should be trying to run business.”