French finance minister Bruno Le Maire has said 75 food producers have pledged to cut prices by July after weeks of government pressure on companies to stabilize food prices.
The 75 producers committed to indexing prices based on declining wholesale costs at a meeting on Thursday and will also submit lists of products to the ministry next week that they will discount on the shelf shortly, Le Maire said.
“All products whose prices fall on wholesale markets should fall in July,” Le Maire said in an interview on BFM TV on Friday.
“I think pasta — the price of wheat is going down — I think oils, I think poultry, I think grains, I think animal feed and a number of products that will be shipped to me next week.
He added that authorities would carry out checks to ensure that producers were complying with their obligations. “Trust is good, verification is even better,” said Le Maire.
French food prices rose 14.1 percent in the year to May, close to the eurozone average, and have overtaken energy as the region’s biggest driver of inflation, sparking alarm among politicians and consumer groups. Some French food prices have risen faster: olive oil prices have risen by a quarter and eggs cost a fifth more.
However, some officials and retailers believe that food manufacturers are taking advantage of the rise in inflation to boost their profit margins by raising prices more than necessary to cover higher energy and raw material costs.
The European Central Bank discussed this at its April meeting, noting that while commodity prices “dropped sharply”, the prices consumers paid for food “remained very sticky, suggesting that rising profit margins prevented inflation”.
Le Maire has threatened to “give name and shame” to companies that refuse to participate in measures to lower food prices and impose a one-off “windfall tax” on producers if prices do not begin to fall.
Most economists are convinced that the increase in food inflation has peaked after the decline of the past two months. In France, it is down from an annual rate of 15.9 percent in March. But there is still uncertainty about how quickly the rise in food prices will subside, and the impact of rising costs on consumers is clear.
Overall food sales volumes in France are down as much as 4 percent this year, according to a retail executive, meaning “French citizens are eating 3 to 4 percent less today than they did a year ago” — with a disproportionate impact on the most vulnerable households.
Le Maire has also been pressuring producers last month to reopen commercial price negotiations between producers and retailers, but has met resistance from many major food groups who don’t want to get back to the table to renegotiate annual prices set in March.
According to Gerardo Martinez Garcia, an economist at French bank BNP Paribas, “lower raw material and energy costs and improved supply chains will dampen food inflation,” but this would happen “only slowly.” He predicted that food inflation in the Eurozone would still be 8 percent by the end of the year and would remain above 4 percent in the first half of next year.