Hello! Anyone listening in Pakistan? – France to let fuel retailers sell below cost in inflation fight

Finance minister says high petrol refining profit margins were a source for concern

PARIS (Reuters/Web Desk) – The French government plans to temporarily lift a ban on retailers selling road fuel below cost as part of efforts to stem inflationary pressures on households, Prime Minister Elisabeth Borne told newspaper Le Parisien.

A renewed surge in pump prices this summer has complicated the government's attempts to curb consumer inflation, with ministers calling on fuel and food industries to cut their margins.

Read more: More food inflation as fuel price hikes increase production, transportation costs

TotalEnergies has extended a cap on fuel prices past the end of the year while some supermarket chains have held promotions to sell petrol at cost.

But a ban on below-cost selling of fuel, dating back to 1963, was preventing distributors from cutting prices further, Borne said, announcing that the ban would be lifted for "several months".

Sales-below-cost laws are mainly aimed at protecting small independent firms from predation by the larger entities which can reduce profit margins or even absorb losses for a limited period as a marketing [business] strategy.

However, the latest plan means the French government is opting for this intervention for sake of consumers by setting aside the business interests.

"With this unprecedented measure, we will obtain tangible results for the French people, without subsidising fuel," she said in an interview published on Saturday.

She rejected the idea of the government reducing fuel taxes, citing the need to reduce the public deficit and debt while saying that large companies should play their part.

Finance Minister Bruno Le Maire said on Thursday that high petrol refining profit margins were a source for concern and may need to be addressed by government action.

Regarding food prices, Borne told Le Parisien that companies from November would be required to indicate on labels when they modify the size of a product.

So-called "shrinkflation", whereby products are sold in a smaller quantity without any price reduction, has become a source of controversy in food retailing during a price spike in the past year.

French supermarket chain Carrefour announced this month it would place signs in its stores next to products that it found to use such practices.