PARIS (Reuters) -France’s finance minister said he had struck a deal with food retailers and suppliers to step up the fight against inflation, but singled out Unilever (LON:ULVR), Nestle and PepsiCo (NASDAQ:PEP) as being among companies which he said were not “cooperating” with the agreement.
After two days of talks with executives and representatives from 75 big retailers and producers, Bruno Le Maire said on Thursday companies had committed to freeze or cut prices on 5,000 everyday products.
He said they had also agreed to bring forward annual price negotiations – initially planned for next year – to September. The negotiations will last until mid-October, with a view to having price cuts from January.
Le Maire had already announced in June a deal with the 75 top retailers and industrial groups supplying them to cut prices on hundreds of products, but this week acknowledged that less than half of them had played ball.
The French government is eager to bring down the price of food and other staples, as retailers warn that French consumers are slashing their purchases of essential goods because of the high cost of living.
August data released on Thursday showed food inflation – though easing for the fifth consecutive month from a peak earlier this year – is still running at 11.1%, nearly twice the overall inflation rate.
TRADING BLAME
Retailers and consumer goods companies are trading blame for who is responsible for the increase in prices even as the cost of raw materials has been falling in recent months.
On Wednesday, retail industry lobby group the Federation du Commerce et de la Distribution (FDC) said that only 25 out of 75 big consumer goods groups had so far agreed to reduce prices, and just on a limited number of products.
Le Maire went a step further on Thursday, naming Unilever, Nestle and Pepsi Co as being among the companies which he said were refusing to toe the line on prices.
The three companies did not immediately respond to requests for comment.
“The large multinationals could do much more,” Le Maire said.
He added that retailers which did not pass on price cuts by suppliers to their customers could face sanctions.
An executive from a top beverage company with knowledge of the negotiations said it was unclear whether any of the companies involved would actually cut prices.
“No one is willing to say ‘I am going to reduce my prices’ because the government is saying so,” he said.
“There are two camps of problematic companies: those who raise prices and then a lot of companies who do ‘shrinkflation’ – that’s very fast growing and the government is trying to fight against it,” he said, referring to the practice of reducing the size of a product while maintaining its sticker price.
Le Maire insisted that there would be checks by anti-fraud authorities to ensure retailers and producers complied with their commitments.
“It was necessary to call back everyone to order,” he said.
Source: Economy - investing.com
