The scheme would aim to get retailers charging the lowest possible amount for some basic products like milk and bread, the Sunday Telegraph reported.

A Number 10 source said the plans are at "drawing board stage" and would not involve government-imposed price controls.

A Treasury source told the Sunday Telegraph: "Food inflation is much more resilient and difficult to get rid of than we anticipated."

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Supermarkets are expected to be allowed to select which items they would cap and only take part in the initiative, modelled on similar agreement in France, on a voluntary basis, the paper reported.

It comes after Chancellor Jeremy Hunt backed interest rate hikes, even if they risk of plunging the UK into recession, in order to combat soaring inflation.

Although down from 10.1%, the Consumer Prices Index of inflation remains high at 8.7%, while experts have warned that alarmingly expensive food is set to overtake energy bills as the "epicentre" of the cost of living crisis.

Food prices are expected to keep rising, having already increased by 19.1% in the year to March, placing additional pressure on families.