The problem is is that the hoarders are making money from flogging the staples at inflated prices so they can then go back and continue to buy up all the new stock.
I would think partly correct. And obviously unethical and pretty atrocious. Although I don't see any reason to believe that it's happening on any more than a very small scale. Most likely, the supermarkets are out of stock on things like toilet roll almost entirely because of people buying it to hoard for themselves, not buying it to sell.
Either the Government needs to act to stop it
Ummm, how? Could you clarify what action you think the Government could take that (a) will stop the small numbers of people hoarding to sell, (b) won't harm legitimate businesses in some other way, (c) can be done on a very short timescale, and (d) won't divert resources from other important stuff.
or they need to flood the shops with so much stock
Really? And what makes you think the supermarkets aren't already doing everything they reasonably can to keep stock levels up? What could the Government do differently? Bear in mind that you can't just magic up rice and toilet rolls from nowhere in 2 seconds flat. Goods do have to actually be manufactured (or grown) and then come through the supply chains to get to the shops.
and then apply rationing limits so nobody needs to buy from the hoarders. At the moment if this cycle continues is will take a long time for normality to resume and for supply chains to overwhelm the hoarders.
Well yes, possibly you haven't noticed but most of the supermarkets are already applying rationing limits to a lot of stuff.