French government forces price cuts on hundreds of food items

France Finance Minister Bruno Le Maire has secured a deal with retailers that will result in price-cuts on hundreds of food items.

Le Maire previously threatened to implement special taxes on food companies that did not lower prices to align with lower costs as supply chain crunches have eased from the critical point they reached in 2022. United Nations' index of world food commodity prices reached a two-year low earlier this month on improving projections for global harvests.

Among the 75 impacted companies, which combined produce 80 percent of the food eaten in France, are Unilever, Auchan, Nestle, Danone, Kraft Heinz, and Pepsico, according to Reuters. Le Maire has been working with French retailers including Carrefour, Casino, Auchan, and E. Leclerc since February 2023 to bring down prices on everyday food staples.

Le Maire said if the food companies do not live up to their promise to cut prices, he could publicly "name and shame" them and they could be made to pay additional taxes.

"As soon as July, prices of certain products will go down," Le Maire told BFM TV. "There will be checks and there will be sanctions for those who don't abide by the rules."

The full list of items that will see price cuts will be released next week, but the list includes pasta, poultry and vegetable oil; and excludes beef, pork, and milk, according to Le Maire.

"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 percent," he said.

In April, France’s per-capita spending on food reached its lowest level since 2009, according to the INSEE statistics agency. At the same time, food industry profits have surged, up 15 percent on average in Q1 2023 year-over-year.

FCD, an industry association representing French supermarket chains, said it welcomed the government's intervention, but said most food companies have thus far refused to renegotiate prices.

Food price inflation has been slowing across Europe, but it remains the biggest factor keeping overall inflation high across the Eurozone. High inflation has led to recessions in Germany and elsewhere, and an expectation that the European Central Bank will raise interest rates again next week. It has said high corporate profit margins are also an inflation risk, according to Reuters.

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