Inflation: France seeking to double list of groceries subject to price cuts
Business
Hungary has imposed mandatory price cuts, Portugal scrapped value added tax on essential food
PARIS (Reuters) – The French government is looking to secure a commitment from supermarkets and consumer goods groups to help fight inflation by doubling the number of products subject to price cuts this year from around 1,000 now, a finance ministry source said on Wednesday.
The source said the government also favoured advancing annual negotiations on prices between retailers and their suppliers, currently set for a window between December and March each year.
French Finance Minister Bruno Le Maire met top retailers on Wednesday and was due to hold talks with their industrial suppliers on Thursday to discuss how to accelerate price cuts.
After the meeting, retail industry lobby group Federation du Commerce et de la Distribution (FDC) said that only 25 out of 75 big consumer good groups had so far agreed to reduce prices, and just on a limited number of products. The group blames global multinationals for the high cost of living.
Earlier on Wednesday, the boss of grocery chain Les Mousquetaires said he did not expect supermarket prices to fall significantly before March next year and echoed a warning by a rival group that French consumers were spending less due to stubbornly high prices.
Thierry Cotillard, whose group has more than 3,000 stores in France, told RTL radio consumers had cut their shopping at supermarkets by around 5 per cent in terms of volume, and were buying fewer fresh products like fish and meat.
"It's a real concern as the French are consuming less ... It's not good for the economy, it's not good for business," he said.
On Tuesday, the CEO of French retailer Carrefour Alexandre Bompard also warned that high prices had resulted in massive cuts in consumer spending on essential goods, and urged the government to delay a law putting a cap on promotions retailers can offer.
In a letter to lawmakers this week Bompard - who is also president of the FDC lobby group - said sales of menstrual products, nappies, and first aid treatments had been falling, calling this evidence that French families cannot afford basic items.
High food prices are a concern for all European governments, with retailers and consumer goods groups trading blame.
This year Britain's competition watchdog said it would step up work looking into grocery prices. Italy has been trying to negotiate an agreement between producers and retailers to cap prices of food and other essentials from October to December, though sources said this month producers had refused to submit to a deal with supermarket chains.
In Hungary, Prime Minister Viktor Orban has imposed mandatory price cuts on some basic food items. And in Portugal, the government announced in March a package to help low-income families, including scrapping the value added tax on essential food products.
In June, Le Maire said he had secured a pledge from 75 top food companies to cut prices on hundreds of products from July to reflect lower raw material costs. But he said on Tuesday that less than half of them had made good on their promise and he wanted more to join the effort.
French retailers have called for more regular price negotiations with consumer goods companies to reflect changes in the price of raw materials. This year those negotiations led to a 10% increase on the price of products on supermarket shelves.
Critics say the system effectively locks retail prices for one year, regardless of fluctuations in commodities and other input prices.
Retailers have also criticised a law passed this year extending a cap of 34% on promotions they can apply to food items to beauty, hygiene and care products.
Bompard at Carrefour has called on the government to delay implementation of the law, currently due to take effect in March 2024, by one year.
