Chancellor John Healey has renewed threats against retailers over profiteering as his options for supporting households narrow amid serious strains on the public finances.
Healey warned supermarkets and fuel retailers that they would not be able to take Britons “for a ride” as the Treasury monitors pricing closely.
The Chancellor said the government “can’t completely stop” cost of living pressures facing families due to the Iran war and the breakdown of trade across the Strait of Hormuz.
He told the Telegraph that he had faith in “British grit” and “determined hope” to pull the country through the economic shock it now faces.
“At home, we will be watching closely for any suggestions that customers are being taken for a ride at the pump or the till,” Healey said in the article.
He added that companies had shown willingness to work with the government during the crisis, with no significant evidence of price gouging emerging so far.
“I want to be blunt in reassuring the public that our regulators have the powers to clamp down on it if it happens,” Healey wrote in the piece.
He also pledged that the government would “give people hope, wherever they come from, whatever their background, that they will live in a prosperous Britain that believes in itself once again.”
Healey follows his predecessor Rachel Reeves in challenging the private sector to resist large price rises even as businesses struggle to remain viable through the ongoing conflict.
Petrol forecourt retailers previously criticised Reeves for using what they described as “inflammatory language” on profiteering, arguing there was little evidence of price-gouging taking place.
Steve Gooding, director of the RAC Foundation, pointed out that fuel brands were more concerned about “pricing themselves out” of markets amid “stiff” competition from rivals.
Asda boss Allan Leighton went further, saying government claims of profiteering had “zero credibility” and did not reflect the realities facing retailers on the ground.
Healey’s remarks set the scene for a difficult Budget on 28 October, where the government is expected to announce a fresh round of tax hikes and potential spending cuts.
The energy price shock stemming from the Iran war is expected to add significantly to government borrowing, further complicating the fiscal picture heading into the autumn statement.
Healey revealed earlier this week that he had written to government ministers asking them to identify extra savings that could be directed towards cost of living priorities.
The Chancellor also faces considerable pressure to find an extra £9bn a year to fund higher defence spending, having resigned from Sir Keir Starmer’s government over the issue in June.