France’s government has come to an agreement with French grocery firms that will see them lower their prices on essential food items.
On Monday, 6 March, French Finance Minister Bruno Le Maire made a joint appearance in Paris with executives from several of the country’s major supermarket chains announcing significant discounts on household items over a three-month period to help French citizens cope with surging inflation.
“This is a strong agreement that will be visible and protects our citizens,” Le Maire said. “Fighting inflation is everyone’s business.”
The initiative was spawned out of Le Maire’s proposal for a so-called “anti-inflation basket” that would act as a harmonized index for French consumers to compare food prices. But after talks with retailers, the idea was dismissed.
Items included in the new program will be marked with a logo featuring the French flag and the slogan “anti-inflation quarter,” according to Le Maire’s comments on Twitter. The participating supermarket chains will take a hit to their margins amounting to several hundred million euros, and he stock price of Carrefour and Casino Guichard-Perrachon fell more than 1 percent on Monday after the announcement was made, Bloomberg reported.
After the three-month program ends, Le Maire said he has asked retailers to work to renegotiate prices with wholesalers to reflect recent declines in producer prices.
“There are few equivalents in recent history of a situation in which all distributors agree to participate collectively,” Le Maire said.
Carrefour CEO Alexandre Bompard said price cuts would be decided by individual chains and would mainly concern own brands, where there is most leeway.
“The measures taken by different retailers are by nature different because there is a principle of freedom for retailers to be able to propose the most efficient promotions for customers,” he said.
The government of French President Emmanuel Macron has been facing mounting public pressure to do more to combat inflation and resistance to a separate effort to overhaul France’s pension system. A proposal to cut France’s sales tax was dismissed by Le Maire, who said it would be too costly and ineffective in reducing prices.
France’s overall inflation is predicted to hit 13 percent through the first half of 2023, with food price inflation reaching 6 percent in January 2023. Across the border in Spain, food cost inflation has hit 15 percent, while the national inflation figure is hovering above 6 percent.
Spanish citizens have planned demonstrations to demand Spain Prime Minister Pedro Sanchez take further action beyond a tax cut in January that included cutting the VAT on basic foodstuffs from 4 percent to zero, while offering a EUR 200 (USD 212) subsidy for families making less than EUR 27,000 (USD 28,700).
In response to inflation, one-third of Spanish households are reducing their consumption of fish and meat and many are shifting to cheaper canned and frozen products.
Photo courtesy of Alexandre Rotenberg/Shutterstock
