Food producers agree to cut prices in France after government pressure
French finance minister Bruno Le Maire has mentioned that 75 meals producers have pledged to decrease costs by July following weeks of strain from the federal government for firms to stabilise meals costs.
The 75 producers dedicated to index costs to falling wholesale prices in a gathering on Thursday, and also will submit lists to the ministry subsequent week of merchandise that they’ll low cost on the shelf within the quick time period, Le Maire mentioned.
“All merchandise whose costs on the wholesale markets are falling should fall in July,” Le Maire mentioned in an interview on BFM TV on Friday.
“I’m considering of pasta — the value of wheat goes down — I’m considering of oils, I’m considering of poultry, I’m considering of cereals, I’m considering of animal feed and numerous merchandise which can be despatched to me subsequent week.”
He added that the authorities would conduct checks to make sure the producers caught to their commitments. “Belief is nice, verification is even higher,” Le Maire mentioned.
French meals costs rose 14.1 per cent within the yr to Could, near the eurozone common, and have overtaken vitality because the area’s largest driver of inflation, elevating alarm amongst politicians and shopper teams. Some French meals costs have risen sooner: olive oil costs are up 1 / 4 and eggs value a fifth extra.
Nonetheless, some officers and retailers imagine meals producers are benefiting from the surge in inflation to spice up their revenue margins by elevating costs greater than wanted to cowl increased vitality and commodity prices.
The European Central Financial institution mentioned this at its assembly in April, observing that though commodity costs had been “falling steeply”, the costs paid by customers for meals “remained very sticky, suggesting that increasing revenue margins had been stopping inflation from falling”.
Le Maire has threatened to “identify and disgrace” firms that refuse to take part in measures to cut back meals costs and to levy a one-time “windfall” tax on producers if costs don’t begin coming down.
Most economists are assured the surge in meals inflation has peaked after it fell for the previous two months. In France, it has fallen from an annual price of 15.9 per cent in March. However there’s nonetheless uncertainty over how briskly the surge in meals costs will dissipate, and the affect of spiralling prices on customers has been marked.
General meals gross sales volumes in France are down as a lot as 4 per cent this yr, in keeping with a retail government, which means that “right this moment, French residents are consuming 3 to 4 per cent lower than a yr in the past” — with the affect disproportionately affecting probably the most susceptible households.
Le Maire has additionally been pressuring producers to reopen industrial worth negotiations between producers and retailers for the previous month, however has encountered resistance from many huge meals teams that don’t wish to return to the desk to renegotiate annual costs that had been set in March.
In accordance with Gerardo Martinez Garcia, an economist at French financial institution BNP Paribas, “decrease commodity and vitality prices and improved provide chains will dampen meals inflation” however this is able to occur “solely slowly”. He forecast eurozone meals inflation would nonetheless be at 8 per cent on the finish of the yr and stay above 4 per cent within the first half of subsequent yr.