“A tsunami of spending cuts”. In France, consumers become poor and buy less and less

According to the chief executive of France's largest supermarket chain, Carrefour, high prices have forced consumers to make "massive cuts" in spending on essential goods, and he urged the government to delay a law capping promotions that dealers can offer.

Speaking on Tuesday, Carrefour chairman and CEO Alexandre Bompard warned that "in France we are witnessing a tsunami of lost spending", adding that "when basic necessities are no longer accessible, when people run out of essential, we must act”.

The comments, quoted by Reuters , which sent Carrefour shares tumbling more than 4%, were the latest salvo in a blame game between the French government and retailers over who is to blame for the rising cost of living.

As Europe's inflation shock eases – albeit briefly – France is seeing prices fall less than many other countries, as food inflation soared since March after the annual price talks between retailers and manufacturers.

The French government is eager to put food price inflation – more than double France's headline inflation rate – back on a downward path, fearing such high levels could undermine fragile consumer confidence. Although household confidence held steady for the third straight month in August — one can only imagine the "seasonal adjustment" gymnastics to enlighten the population that everyone is happy — it remained well below its long-term average, according to a monthly survey by the statistical agency INSEE.

Bompard, who was among French retail executives due to meet with Finance Minister Bruno Le Maire on Wednesday to discuss ways to lower prices, said he would call for a one-year moratorium on enforcement of the trade competition law, which entry into force is currently scheduled for next March. The so-called Descrozaille law, approved in March this year, extends the 34% limit on the promotions that retailers can apply to food items and beauty, hygiene and care products.

Bompard, which has cut prices to win back customers in the face of stiff competition, said that while Carrefour is now free to sell washing powder at a 60% discount, it will no longer be able to do so when the law takes effect.

The stated goal of the law was to protect small producers in price negotiations with retailers; however, retail giants like Carrefour say this law limits their bargaining power with big suppliers, and Bompard said on Tuesday the new rules only benefit global multinationals like Procter & Gamble, Henkel and Unilever. Almost as if it were yet another government maneuver to benefit multinationals at the expense of ordinary people.

“They see their margins increasing while the French find themselves in a situation of privation,” Bompard told Franceinfo. P&G, Unilever and Henkel did not immediately respond to requests for comment.

Le Maire won pledges from 75 food producers in March to cut prices on hundreds of products, but last month a junior minister said only about 40 had kept their promise. On Tuesday, Le Maire promised to step up pressure on retailers and manufacturers to speed up price cuts . But if the costs are high, it cannot oblige i

“We are on the right track,” he said. “Prices are coming down because we took action, because we put pressure on retailers and manufacturers, and because we will continue to do so.” If more than half of the producers have not lowered their prices, I think it is, more than anything else, a politician's wish.

In Italy, try to go to a supermarket: you will see the shelves of products on special offer empty.

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The article “A tsunami of spending cuts”. In France, consumers become poor and buy less and less comes from Scenari Economics .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/uno-tsunami-di-taglio-della-spesa-in-francia-i-consumatori-diventano-poveri-e-comprano-sempre-di-meno/ on Sat, 02 Sep 2023 10:59:20 +0000.