Will the Anti-Inflation Quarter Work?
What will change with the anti-inflation pact for large-scale retail trade. The in-depth analysis by Mario Sassi, author of the Blog-notes on work
We are certainly not at the Protocol on income and employment policy, on contractual structures, on labor policies and on support for the production system (Ciampi-Giugni Protocol) of 07.23.93 but the agreement signed by the Government with the 32 associations of distribution, industry, craftsmanship, cooperatives and the world of agriculture is an important signal. Although characterized by the classic liturgy foreseen in these cases in favor of the camera to emphasize the event, the role of the Government and the signatories, the passage was nevertheless delicate and not at all predictable. The so-called Anti-inflation Quarter begins with the institutional presence of the Prime Minister and the competent ministries. Centromarca and Ibc who had initially attempted to escape "confirmed today at Palazzo Chigi, in the presence of the Prime Minister Giorgia Meloni, the Minister of Enterprise and Made in Italy Adolfo Urso, and the Minister of Agriculture, Food and Forestry Sovereignty Francesco Lollobrigida, the maximum support of the FMCG industry to contain inflationary tensions”.
Thus Federdistribuzione which reiterated "the commitment for the next quarter, during which our companies will enhance the offer of savings for millions of Italians, is in fact added to all the efforts made in the last eighteen months to slow down the increase in consumer prices, slowing down the growth of energy costs, raw materials and the list prices of industrial products. This is because the very essence of our sector puts "Dedicated to you" at the center to provide support to lower income families, just like today the anti-inflation quarter which demonstrates, once again, the sense of responsibility of our companies ”. And so did all the rest of those present who metaphorically committed themselves to the classic collective signature.
WHAT WILL HAPPEN NOW?
Once the liturgy has been respected, what will happen now? First of all, the choice to leave the signatories absolute freedom to decline their commitment by focusing on everyone's responsibility and not on an imposition underlines the seriousness of the initiative. There are inevitable price increases that cannot be stopped under penalty of the survival of economic realities, others that can be postponed and still others that are the result of questionable decisions linked to the strategies of individual companies. Companies are therefore free to demonstrate or not their social sensitivity and to feel part of a collective effort in the interest of the country and family consumption or not. The past eighteen months which saw the commitment to the theme of large-scale retail trade signs would have been forgotten or trivialized without the confirmation of this experimentation for the next quarter.
WHAT THE SIGNATORIES OF THE ANTI-INFLATION PACT GET
What do the signatories take home? First of all, the certification that the Government and the signatories express a common desire to manage a fundamental issue. And this goes beyond the economic effect it will produce. We do not know how long the ongoing conflict will last, nor the medium and long-term impacts. Knowing that that table is open and that other protagonists can join is in itself an important fact.
Secondly, that table allows the protagonists to assert their respective needs. In fact, other topics could be addressed to give even more meaning to that signature. Above all, if this experiment were to give some results and the parties were to agree to extend it to 2024.
Thirdly, it sends a signal to the country. Those who signed believe that we can seriously commit to the issue through a common effort. Evading the pact would only demonstrate the unreliability of those who were to back out. The agreement includes no further price increases in the quarter. It certainly doesn't prevent them from decreasing.
However, reality has shown that the post-Covid restart, the increases in raw materials and energy, the need to "put hay on the farm" had pushed many companies to round up their price lists upwards, now out of control, which fueled the inflation figure making shopping, especially for less well-off families, an increasingly complicated exercise. This agreement tells the country that at least that spiral has stopped for the 32 signatories from today. There are obviously those who claim that it would have stopped anyway. The "covenant skeptics" together with the do-gooders abound everywhere but that's how it is.
FORECASTS
Having said all this, it is to re-underline the experimental nature of the Pact and beyond the usual criticisms, what do I expect for the future? First of all, let the trade unions be involved. A resumption of out-of-control economic demands as is happening in other countries would undermine the very stability of the agreement and its prospects. Those who underestimate it do not consider, among other things, the element of involvement and social responsibility that this act could bring with it.
Secondly, coherence on the fiscal level or through targeted interventions by the Government. Structural initiatives can be implemented, even limited in time, to support the resolution of problems that have long been raised by companies and sectors. Thirdly, that what this agreement has produced in terms of involvement continues by consolidating a relationship of convergence in the supply chain between the various protagonists that compose it. The problem of prices, fair remuneration and responsibilities should be resolved without the need for monitoring or political forcing.
Finally, as regards large-scale retail trade, we will see if the individual brands are up to this commitment. Of course there will be cunning and unscrupulous interpretations of that signature. They must be taken into account. But at the end of the quarter a line will be drawn. I don't think that the consumer associations enraged by their exclusion from the table, the media and all those who have an interest in keeping the bar high to underline the limits and not the potential of the agreement, will remain silent. Fortunately, the pact got off to a quiet start. The expectations are there but they are not very high. It's better that way. The so-called "catwalk" took place but without undue emphasis. Now the bell rings. The recess is then over.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/patto-anti-inflazione-grande-distribuzione/ on Sat, 30 Sep 2023 05:41:28 +0000.