For any Quebecer who lands in France, the price of a baguette is derisory. In the supermarket, you can get away with it for 0.50 euro ($0.73). Including small high-end bakeries, you have to pay an average of 0.93 euros in France, or the equivalent of $1.36.
Posted at 1:24 a.m. Updated at 6:30 a.m.
But take comfort, lovers of good food, food inflation is hitting the French more than you. The wand is not representative of reality.
In August, the price of their grocery cart jumped 11.1%. It was less brutal than in March (+16%) or April (+15%), but the decline in consumer purchasing power there remains very worrying.
French households spend 14% of their disposable income on food. In Canada, it’s 10%, according to data released in August by Picodi1.
It is in this context that France took the bull by the horns to “break the spiral of prices definitively”. Its Minister of the Economy Bruno Le Maire met last week with the major grocery chains and their suppliers to find a solution. The 75 largest manufacturers in France then agreed to freeze or lower the price of 5,000 products, which represents around a quarter of the supply of a large supermarket.
The companies will draw up a list of 5,000 products this fall and the competent authorities will ensure compliance with the agreement, we promise.
In addition, supermarkets will “compulsorily and immediately” pass on to their customers all price reductions granted by suppliers, warned the minister. Delaying price changes on the shelves is a simple, but surprisingly effective strategy for improving a profit margin…
Quebec families who are struggling to feed themselves properly because the price of the basket has jumped 8.5% over the past year have every reason to be swooned by the position taken by the French Minister of the Economy. Announcing that we are going to bring the supermarkets and multinationals that stock their shelves into line pays off politically.
In Canada, elected officials have instead chosen to force the leaders of the major supermarket chains to come and explain to them, in Ottawa, what is causing the price increases. Unsurprisingly, this unentertaining play was not the source of great revelations. No one emerged flayed from his interrogation and no elected official saw his popularity explode after the exercise.
In France, Minister Bruno Le Maire was not afraid to alienate private companies, naming, on television, those who “could do a lot more” to reduce the cost of the grocery basket. He pointed to Unilever, Nestlé and PepsiCo, while praising the efforts of Barilla, which cut the price of its spaghetti in response to the bearish price of wheat. He is not wrong, the profits of multinationals have generally been maintained despite declines in sales volume, thanks to the increase in their prices.2.
The chosen one certainly does not lack guts. But his idea of forcing a price freeze – while sounding enticing – raises as many questions as it entails risks.
Will the 75 targeted companies agree to reduce their profits to please the Minister or will they find tricks to please their shareholders? It is not impossible that the agreement on the 5000 prices causes a series of more or less desirable side effects.
Take the example of a vegetable soup manufacturer.
It could force market gardeners already out of breath to lower the price of their vegetables. In the absence of an agreement, it could stop sourcing from Europe and turn to China. Another strategy would be to reduce the quality of the ingredients of the recipe to reduce its production costs, which is called dequalification. It is not impossible for the manufacturer to move its production to a less expensive country or to stop selling its product in France altogether. Even if it is morally embarrassing, nothing would prevent him from increasing the price of his soup in other countries to compensate for his loss of earnings in the country of Emmanuel Macron. And these are just a few examples…
Quite rightly, Professor Maurice Doyon, of the Faculty of Agriculture and Food Sciences at Laval University, wonders “who will get the hang of it” in the end.
For the senior director of Dalhousie University’s Agrifood Analytical Sciences Laboratory, Sylvain Charlebois, there is no doubt that the government’s little game is “extremely dangerous”, because the supply chain will adjust and the consumer will gain nothing.
Let’s not be fooled: as a senior executive of France’s largest supermarket chain, E. Leclerc, said publicly on Monday: “I think there are people who are for inflation, it’s the left unsaid in this debate. There is a financial community that owns stocks of companies that needs and wants this inflation. »
That goes for retailers too, mind you. Moreover, they could maintain their margins by raising the price of the 15,000 other products on their shelves. Among others.
I am already looking forward to the official figures on inflation in France for next winter, to see if the measure has had the expected effect on household budgets. One thing is certain, if the result is spectacular, we can say that the supermarkets and their suppliers had indeed shown greed. But they will no doubt find a way to avoid such headlines in the newspapers.
