For thousands of years, governments have been tempted to respond to inflationary pressures by imposing caps on prices. Diocletian’s AD 301 Edict on Maximum Prices is a famous early example, but there were repeats throughout the ages. By the 1970s, prices and incomes policies were being used by many governments to try to counter inflation. And this has not been solely a practice of left-wing governments. In 1982, the right-wing National Party Prime Minister of New Zealand, Robert Muldoon, announced a nationwide freeze on wages and most prices, which lasted for the next two years.

It sounds so simple. If consumers are suffering because prices are going up, then forbid that. Who could object, beyond greedy firms profiteering by pushing prices up? This notion that price rises are ‘profiteering’ or ‘price gouging’ has in recent years become particularly associated with the supermarkets sector. There were complaints of profiteering when supermarkets raised the prices of products that ran out or ran short during Covid, such as hand sanitiser. In the US, alleged ‘price gouging’ by supermarkets and how to curtail it was a significant plank of Kamala Harris’ 2024 Presidential campaign. Similarly, New York Mayor Zohran Mamdani is establishing a system of state-owned (specifically, city-owned) supermarkets in response to what he describes as ‘price gouging’.

A key SNP manifesto pledge for the 2026 Scottish Parliament elections was that it would impose a legal cap on 20-50 essential everyday items sold in large supermarkets. Now it appears the UK Government has been negotiating a similar arrangement, seeking to get supermarkets to agree to caps on the prices of 20 items in exchange for some temporary relaxation of cost-raising regulations.

...read more at capx.co