France forces food companies to drop prices – or face threat of financial penalties

Government seeks drops of up to 10 per cent starting next month – and may also name and shame those who don’t comply

The French government is furious that prices consumers pay in supermarkets have hit record levels in recent months (iStock/Getty Images)

France’s top food companies are to cut prices on hundreds of products from next month – with the country’s government threatening financial sanctions if they break that promise.

“As soon as July, prices of certain products will go down,” the finance minister, Bruno Le Maire, told BFM TV on Friday after meeting representatives of the food industry the previous day. “There will be checks and there will be sanctions for those who don’t abide by the rules,” Mr Le Maire said, mentioning pasta, poultry and vegetable oil as some of the products on which prices will be cut.

Mr Le Maire said if the 75 food companies – that make 80 per cent of what the French eat – do not live up to their promise he could name and shame them to the public.

“On a certain number of products where wholesale prices have fallen, then the [retail] prices will have to fall too, by 2, 3, 5, maybe even 10 per cent,” Mr Le Maire said, adding he would have the list of products concerned next week.

The government is furious that prices consumers pay in supermarkets have hit record levels in recent months even though the prices industry pays for many raw materials have been declining.

Mr Le Maire has previously threatened to claw back what he described as "undue" profits from food companies with special taxes if they did not pass on falling raw materials prices to consumers already struggling with high energy bills.

While food inflation has become a concern for European governments from Britain to Italy recently, France has been among the most aggressive in pushing price cuts. In Hungary, Prime Minister Viktor Orban has imposed mandatory price cuts on some basic food items.

Concerns about “greedflation” – supermarkets and food companies keeping prices artificially high despite falling costs in areas such as transport and fuel – have prompted a competition watchdog investigation in the UK. The British government has also been urging manufacturers to drop prices. with the chancellor, Jeremy Hunt, meeting some last month.

Unilever, the maker of Hellmann's mayonnaise and Knorr soup, said it was one of the 75 companies the government said should cut prices next month.

"We confirm our participation in ongoing discussions with the Ministry of the Economy and all stakeholders, including retailers, to identify the best actions to serve the purchasing power of the French, in this context of high inflation," a Unilever spokesperson said.

Other big companies Nestle, Danone, Kraft Heinz and Pepsico did not have an immediate comment.

French annual inflation cooled more than expected in May to its lowest level in a year at 6 per cent as energy and food price increases moderated. But food prices still were up 14 per cent last month after a record spike of almost 16 per cent in March.

Food prices surged after food companies and big retailers agreed in March to an average 10% increase in prices, responding to a surge in input prices the previous year and wages after Russia's February 2022 invasion of Ukraine.

However, the surge has hit the food-loving French's appetite as their spending on food, adjusting for inflation, has fallen to its lowest level since March 2009, according to data from the INSEE statistics agency.

Meanwhile, the food industry has seen profits surge, largely making up for sharp falls during the pandemic, Mr Le Maire said. The industry's operating profits were up 15 per cent in the first quarter from the previous quarter, according to data from INSEE.

Reuters