Retailers in France have agreed to offer the lowest possible prices for essential food items to help households cope with surging inflation, French Finance Minister Bruno Le Maire said on Monday.
(Bloomberg) — Retailers in France have agreed to offer the lowest possible prices for essential food items to help households cope with surging inflation, French Finance Minister Bruno Le Maire said on Monday.
Supermarket chains will take a hit to their margins amounting to several hundred million euros by discounting products during a three-month campaign, he said. Items affected will carry a logo featuring the French flag and the slogan “anti-inflation quarter.”
“This is a strong agreement that will be visible and protects our citizens,” Le Maire told a news conference. “Fighting inflation is everyone’s business.”
The biggest price spike in a generation is becoming an increasingly difficult challenge for French President Emmanuel Macron, who is already facing mass protests over his plans to overhaul the pension system.
While vast sums were spent containing the initial energy-price shock that began in late 2021, stresses on public finances have forced some support to be wound back. Food inflation is even more complicated as the government can less easily intervene than in electricity and natural gas markets.
Last month, ministers touted an “anti-inflation basket” that would act as a harmonized index for consumers to compare prices, but the idea was dropped after talks with retailers.
Carrefour SA Chief Executive Officer Alexandre Bompard, one of several retail chiefs standing alongside Le Maire on Monday, told reporters that 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.
Shares in Carrefour and competitor Casino Guichard-Perrachon SA fell more than 1% after the announcement in Paris.
In neighboring Spain, despite cuts to value-added tax on several food products in January, Prime Minister Pedro Sanchez is under pressure to do more as food inflation exceeds 15%. His junior coalition partner, the far-left Unidas Podemos party, last week demanded a food-price cap and a discount of 14% on 20 basic items.
Le Maire ruled out cutting French sales taxes, which he said would be too costly for public finances and ineffective in reducing prices. When the anti-inflation initiative expires, he said the government has asked retailers 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.
(Updates with comments from French finance minister starting in third paragraph, comments from Carrefour CEO starting in seventh paragraph)
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