Macron’s recipe against price increases: pressure on supermarkets and industry without intervening in the market

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Macron’s recipe against price increases: pressure on supermarkets and industry without intervening in the market

Macron’s recipe against price increases: pressure on supermarkets and industry without intervening in the market - 1

At the beginning of the new political course, food inflation and its impact on purchasing power continue to be one of the central issues of today in France: prices in this sector have risen 21% in the last two years and especially affect the most modest homes.

One of the main food assistance associations in the country, Les Restos du cœur, that distributes food to low-income people, raised the alarm a few weeks ago. Given the significant increase in costs and the number of meal distributions – 170 million this year, 30 million more than the previous one –, Those responsible indicated that without additional resources They will not be able to satisfy all demands.

In this context, the Government – ​​which announced a price drop for the end of summer that has not occurred – is in a delicate position. The Minister of Economy, Bruno Le Maire, is aware that purchasing power is one of the main concerns of the French, but he has declared on several occasions his opposition to any measure that involves intervening in prices or limiting the room for maneuver of companies. .

One of its main lines of action is arbitration between distributors (large supermarket chains) and multinationals in the agri-food sector. The meetings have taken place in recent months at the Ministry’s headquarters, on the Bercy quay, the last one at the end of August. Thus, after two days of negotiations, the head of the Economy announced the expansion of the anti-inflation basket that he had promoted in August with up to 5,000 products “that will remain the same or will drop in price.” Double the initial effort.

However, the list will be drawn up by manufacturers and supermarket chains, who will have complete freedom to choose the products affected by an initiative that will last until the end of the year. Distributors have also committed to passing on price reductions by suppliers to the final sale.

Crossed accusations

Initially, the rise in inflation was attributed to the start of the war in Ukraine and supply chain difficulties related to the emergence of the pandemic. But as the months have passed, accusations about who was benefiting from the price increases have evolved. Supermarkets accuse manufacturers of unjustified increases in prices, which inflate the profit margins of the giants in the sector, to the detriment of distributors and consumers.

In recent months, Emmanuel Macron and Bruno Le Maire have raised the tone against some large manufacturers. Some days ago The minister pointed specifically to Unilever, Nestlé and Pepsi, that, in his opinion, “they could do much more” to fight against the rise in prices, while congratulating other manufacturers who have “played their role” by announcing discounts on their products, such as the company Barilla and the specialized group in Avril oil.

Macron’s recipe against price increases: pressure on supermarkets and industry without intervening in the market - 3

In addition, Le Maire – a possible presidential candidate in 2027 – has addressed another of the accusations that weigh on the giants of the agri-food industry: the reduction in the size of some packaging as a measure to pass on price increases to consumers. A technique that is being talked about a lot in this month of September, known as shrinkflation (of shrinkshrink in English, e inflation). “Bottles of orange juice that previously contained one liter now contain 900ml, without clearly informing the customer: that is called stealing,” the minister was outraged this month in an interview in The Figaroshortly before announcing that in the future it will be mandatory to indicate any reduction in packaging size.

Inflation engine

In a context in which companies increase their profits and the most modest households become poorer, the debate about the winners and losers of inflation also increases in intensity. In 2022, wages increased by 3.8%, while inflation reached 5.9%, according to the Bank of France. Since autumn 2022, more and more institutions point to corporate profits as the driver of inflation.

Big food brands claim that the price increases they are implementing are nothing more than a reflection of rising costs, but this spring the European Central Bank (ECB) began to point in the direction of the companies’ extraordinary profits. “During the period 1999-2022, the increase in benefits contributed a third to inflation; while only in 2022 it represented two thirds,” stated a group of ECB specialists in March. in a note from the institutionexpanding some statements by its chief economistthe Irishman Philip Lane.

In France, according to data from the National Institute of Statistics and Economic Studies, company profits have not stopped rising in the last three quarters. The latest results of the French stock index (CAC 40) reflect this: in the first six months of the year, 38 multinationals generated net profits worth more than 81 billion euros, which represents an increase of 15%, according to calculations by the France-Presse agency, a trend especially marked in companies in the food industry.

State capacity

The debate also arises about the capacity of the State to influence the market. Last Wednesday, the national secretary of the French Communist Party (PCF), Fabien Roussel, one of the main figures of the progressive coalition in the National Assembly, called on citizens to gather in front of the prefectures – equivalent to the Government delegations – and “even invade them if necessary”, as a way of putting pressure on the Government to “take measures” in the face of the rise in food, energy and fuel prices.

“We cannot allow ourselves to be fleeced without saying anything,” said the national secretary of the PCF in an interview with the newspaper L’Humanité on September 13, clarifying that he is “a supporter of non-violent action.” Specifically, Roussel asked Macron to “lock down food prices, lower taxes on energy (…) and increase salaries and pensions at the level of inflation.”

In April, a part of the Nupes coalition of leftist forces had tried to promote legal measures to include the blocking of food prices and an anti-inflation basket in a bill, in response to the “social emergency” that the country. The deputies of the presidential coalition and the right opposed it.

Instead, to accelerate possible price drops, the Executive hopes to be able to advance the deadline for commercial negotiations between manufacturers and retailers. During these discussions, the reference prices are set for the products that reach the shelves for the following year and it is within the framework of these agreements where the Minister of Economy hopes to see the inflationary spiral stopped.

However, the Government has varied its speech on another of the proposals coming from the left that may influence inflation: the increase in taxation of taxes. super benefits of multinationals. If, initially, Macron and Le Maire were reluctant to any type of measure in that sense, the Executive ended up promoting the creation of “a temporary solidarity contribution” in companies (a 33% tax on profits that exceed by more 20% the average of previous years).

And at this beginning of the political course, the Government is trying to exert its influence on employers so that the value is distributed more equitably in favor of employees. Furthermore, the last possible axis that the Executive considers to change the trend is that of salaries. Macron has recently announced the holding of a large social conference that will explore, among other topics, the rise of the lowest wages. The idea arose after a marathon dinner in which the president shared a table with representatives of all political forces on September 7.

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Gerald Russell

a passionate mechanical engineering student at the University of Technology of Compiegne. With a thirst for knowledge and a curious mind, Gerald dives into the depths of programming, immersing himself in the world of code. As a technology enthusiast and self-proclaimed mad engineer, he revels in pushing the boundaries of what's possible. Inspired by his deep fascination with technology, Gerald ventured into the realm of entrepreneurship, founding a tech startup that aims to revolutionize the industry. Driven by his insatiable curiosity and relentless ambition, Gerald continues to shape his path, forever driven by the pursuit of innovation and the desire to make a lasting impact.