The French government wants to break the inflationary spiral on store shelves at any cost: the Minister of the Economy openly accused multinational companies of "greed" and is freezing prices on 5,000 products, according to RetailDetail.

A new agreement with the industry

Persistent inflation in food products is a matter of critical importance for the French Minister of Economy, Bruno Le Maire. Although food inflation is slowing down in the country, 11.1% in August is still much higher than the overall inflation rate of 4.8%.

Earlier this year, Le Maire had already pressured both supermarkets and food producers to lower prices on essential products in line with falling raw material prices.

Now he is taking it a step further: on Thursday, he reached an agreement with retailers and food producers on three measures aimed at structurally lowering prices, as reported by the French press.

Three measures

Firstly, annual price negotiations between producers and retailers will be brought forward to September instead of being held between December and March. This decision comes at the request of supermarket chains, who want to be able to pass on the declining production costs to consumers as soon as possible. This could now happen as early as January.

The second measure: the prices of 5,000 products, approximately a quarter of the average supermarket offering, will not be allowed to increase next year. This is three times more than the 1,500 references already agreed upon. The exact list will be drawn up by retailers and producers in the coming weeks.

Finally, retailers will be required to "obligatorily and immediately" pass on price reductions granted by producers to customers, thereby preventing them from delaying to improve their margins. The French competition watchdog will carry out the necessary checks to ensure the implementation of these last two measures.

Accusations

Remarkably, the minister explicitly accused some foreign multinationals of not playing their role in the fight against inflation. Specifically, he mentioned PepsiCo, Nestlé, and Unilever, while at the same time saying that the pasta brand Barilla and the oil producer Avril are better allies.

In response, Carrefour CEO Alexandre Bompard has already criticized Procter & Gamble, Henkel, and Unilever for increasing margins at the expense of consumers.

In neighboring Belgium, where food prices are still much higher than in France, Le Maire's counterpart, Pierre-Yves Dermagne, has already threatened to disclose the names of companies that do not pass on the drop in raw material costs.

This has not yet happened, although he has asked the Price Observatory to monitor supermarket prices monthly and report abnormal developments to the Belgian Competition Authority.