France freezes 5000 food prices in fight against ‘greedflation’

The French government wants to break the inflatory spiral on shop shelves at all costs: the Economy Minister has openly accused multinationals of “greedflation” and blocks the prices of 5,000 products.

Agreement with the industry

The persistent inflation of food products is a political issue of paramount importance for French Economy Minister Bruno Le Maire. Although food inflation is now slowing down a little in the country, its 11.1 % in August still remains much higher than the general inflation rate of 4.8 %.

Earlier this year, Le Maire already put pressure on both supermarkets and food manufacturers to bring prices of essential products back down in line with the fall in commodity prices. Now he is going a step further: on Thursday, he reached an agreement with food retailers and manufacturers on three measures to lead to structurally lower prices, French media report.

Three measures

First, the annual price negotiations between manufacturers and retailers will be brought forward to September, instead of between December and March. This decision comes at the request of supermarket chains, which want to be able to pass on falling production costs to consumers as soon as possible. That could now happen as early as January.

Second measure: the prices of 5,000 products, about a quarter of the average supermarket offer, will not be allowed to move unless downwards next year. That is three times more than the 1,500 references already agreed to so far. The exact list will be compiled by retailers and manufacturers in the coming weeks.

Finally, retailers will have to pass on price cuts granted by manufacturers “compulsorily and immediately” to customers and thus can not delay them to improve their margins. The French competition watchdog will carry out the necessary checks to ensure the implementation of these last two measures.

Allegations

Remarkably, the minister explicitly accused some foreign multinationals of not doing their part in the fight against inflation. Specifically, he mentioned PepsiCo, Nestlé and Unilever, while at the same time saying that pasta brand Barilla and oil producer Avril were better allies. Earlier this week, Carrefour CEO Alexandre Bompard had already lashed out at Procter & Gamble, Henkel and Unilever for allegedly increasing their margins on the consumers’ expense.

In neighbouring Belgium, where food prices are still a lot higher than in France, Le Maire’s colleague Pierre-Yves Dermagne has already threatened to reveal the names of companies that do not pass on falling raw material costs. It has not come to that yet, though he has asked the Prices Observatory to monitor supermarket prices on a monthly basis and report abnormal evolutions to the Belgian Competition Authority.