After 15 years of depreciation, France is changing its cycle

Pushing your cart through the aisles of a supermarket isn’t a cakewalk for months. In the coming weeks, the operation is likely to be even more depressing, especially for the most modest households, which weigh heavily on the food budget. Inflation, which was 12.6% in December 2022, will not decrease according to the latest INSEE estimates. Price hikes on shelves prompting Economy Minister Bruno Le Maire to exit ‘at all costs’ “main theme” from the new mandate. One point “excessive vigilance”, he said during his swearing-in to the media. Especially since green development and relocations will automatically increase prices.

Also Read – Michel-Edouard Leclerc: “Inflation should peak between April and June”

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Trade talks under pressure

For food and consumer products such as laundry detergent or shampoo, the price increases agreed between manufacturers and large retailers for 2023 will be substantial, averaging about 20%, according to System U boss Dominique Schelcher. They explain the unprecedented tension that has rocked the start of the traditional annual price talks in recent days. The producers there loudly reminded us that they had not entered yet “difficult”. The price of certain agricultural raw materials, several categories of packaging products, and modes of transportation have indeed stopped rising, but the impact of the energy crisis on their production costs is still to come. A large number of companies are supplied with electricity on a fixed-price contract for the duration of the contract. Most of these contracts will expire at the end of 2022 or expire in 2023. For companies whose contracts are indexed to the market price, the bill will rotate.

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Tools are already in place to protect consumers, farmers, producers and distributors

During the galette de l’Elysée, touched by the bakers’ appeal, Emmanuel Macron asked for a gesture in favor of companies with fewer than 9 employees. They bought it “automatic guaranteed rate” funded by the state. SMEs will have access “damper device”. Large groups will not be able to rely on government support to benefit from better rates. Nevertheless, he gestured in their direction by proposing a reworking of the legal framework for trade negotiations. Renaissance MP Frédéric Descrozaille’s bill voted unanimously this week will not go on the Assembly’s record. This should have only a limited effect on the price of the labels. “Tools are already in place to protect consumers, farmers, producers and distributors. UFC-Que Choisir expert Olivier Andrault emphasizes. Just enforce the law. »

opposing forces

Bercy has been working on a measure billed as an anti-inflation basket for several days. Distributors will be invited to select 20 references to offer at a discounted price for an indefinite period. Each sign would make the basket the way it wanted. “Choosing 20 products when all are affected is just a trick to lull the consumer to sleep”, angry Olivier Andrault.

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On the one hand, world commodity prices are in the process of falling, on the other hand, energy price increases are ahead of us.

For Rexecode CEO Denis Ferrand, the inflation shock is currently torn between two opposing forces. “On the one hand, world commodity prices are on the decline, on the other hand, energy price increases are ahead of us”, forms. Whatever the impact of the current trade negotiations on prices, it is almost impossible to gauge the real evolution of food inflation between now and the end of the year.

The French have begun to change their habits

“Ex-farm prices are therefore still 30% higher than in November 2019” the economist assures. In his view, it should be separated “tree of reason”, but in the end everyone will have to take their share of the increase. Fueled by a variety of aid measures since Covid, including a tariff shield for energy, the French realized in the second half that after fifteen years of deflation and broken prices, times have changed decisively.

They began to change their habits by reducing the contents of their carts. They sacrifice organic produce, meat and fish and opt for private labels that discounters tailor to their specialties. “They are now applying devaluation: learn to buy cheaper, look for promotions, reduce their volume”, Gaëlle Le Floch, marketing director specializing in consumer goods at Kantar, describes. “Affordability remains their number one concern”, he adds. The coming months may give way to the search for waste and recycling, two reliable and… sustainable values.

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