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Business of Food

French government puts price cap on supermarket food products to help with rising inflation

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4 min read
AUTHOR: Fiona Holland
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France has secured a deal with some of the country’s major retailers to place a price cap on staple food products and ease the pressure of inflation on consumers.

Retailers have been asked to freeze the prices of a variety of food items of their choice, which will likely be own-brand products, as supermarkets have the best control on the prices of these items.

Recent studies have shown that in some parts of the world the price of branded products are going up much faster than the rate of grocery inflation.

Supermarkets must bring the price of these items down as low as possible this month, Finance Minister Bruno Le Maire explained in a press briefing.

The period between April and June will be an “anti-inflationary” quarter, he said, and is expected to cost retailers “several hundred million euros”. Retailers will be able to re-negotiate prices with suppliers from the end of June.

There are also additional plans to give food coupons to the most food insecure in the country throughout the year.

Food inflation reached 14.5% in February year-on-year, according to the country’s institute of statistics INSEE.

Some supermarkets have already proposed price changes. Prior to the government’s announcement this week, Carrefour said it would soon have 200 low-cost items on the shelves costing under €2 from March 15 and would be fixed at this price until June 15.

While the majority of the country’s food retailers engaged in talks with the government, hypermarket chain E.Leclerc abstained. The company’s founder Michel-Édouard Leclerc told CNews he saw no need to wait for political talks to cut prices and that his company is aiming to provide the lowest prices on all as opposed to specific products.

Some critics are sceptical about the proposed price caps. Olivier Andrault from consumer defence group UFC-Que Choisir told Libération in an interview: “Indeed, there is no definition of what a ‘lowest possible price’ is, as argued by Bruno Le Maire. Nothing prevents these supposedly cheap products from being marketed at this price for a long time, since there is no control.”

As the country figures out how to manage the impact of inflation on consumers, it has also just announced plans to launch a €500 million support fund for the agrifood sector.

Some €200 million will be invested by the state to help the industry improve its competitiveness and boost innovation to help the sector enter new markets and increase levels of exports. The remaining sum will be provided by private investors, according to French Industry Minister, Roland Lescure.

“The French agri-food industry is a tremendous asset for the food sovereignty of our country”, French Minister of Agriculture and Food Marc Fesneau said in a statement. He continued: “The support plan carries the ambition of the State and is structuring for the sector while allowing it to consolidate its foundations to better project itself in its development towards a more carbon-free and better profitable food production chain for farmers.”

The investment hopes to support SMEs with scaling up and make crop production more efficient, through funding the research and development of new agricultural technology, robots, and modern glasshouses.

The new support scheme also allows companies to postpone the payment of social and tax charges, if needed.

Lescure also added: “The State is alongside players in the food industry to strengthen the competitiveness of the sector and consolidate our food sovereignty.

“Nothing will be done, however, without the determination of all the actors to also go in this direction and to work on innovative and value-creating collective solutions”.

Understand the impact that inflation has on all stages of the food supply chain in this episode of the Food Matters Live Podcast:

What rising inflation means for the food industry

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