Baskets of 500 grams of strawberries at 2.69 euros and tomatoes of the Italian San Marzano variety at 2.75 euros per kilo. These were some of the offers “at cost price” last week at the U Express supermarket in Garches, on the western outskirts of Paris. In the nearby Monoprix de Saint-Cloud, four 100-gram pots of white cheese were advertised at the “locked price†of 1.39 euros.
The “anti-inflation quarter” launched with great fanfare by the French government on March 6, after reaching an agreement with the main supermarket chains, has so far failed to stop the upward spiral in food prices, which was at 15.9% last month and could reach 25% in June, according to fears from some industry officials.
The pact consisted of each chain agreeing to set a list of essential products at the lowest possible price, minimizing their own commercial margins. The Government was forced to intervene because in France, more than in other countries, the population demands a protective role from the State. In addition, President Emmanuel Macron needed to present some success, at least temporary relief for the popular classes and thus offset the bitter pill of the delay in the retirement age.
The “anti-inflation quarter†has effectively exacerbated competition between the various brands. Going into a supermarket in France today causes confusion due to so many different types of labels to distinguish the offers, in addition to the campaigns to accumulate points if they are regular customers who have downloaded an application. It is not easy to choose between so many stimuli. In Leclerc group establishments they go to the extreme of placing clearly visible signs at the entrance explaining the price difference – always favorable to Leclerc, of course – between them and those of the competition in the area. They specify the direction of rivals and their sales area. In theory the data is produced by an independent agency.
The strategies are varied. In the Monoprix chain, for example, they have been carrying out an “anti-waste” campaign for some time that consists of reducing the price of products with a near expiration date by up to 30%.
Consumer associations have been very skeptical from the outset about the “anti-inflation quarter” because they considered that the large distribution chains could not be trusted with the policy to contain prices. According to his analysis, supermarket brands have taken the opportunity to prioritize the sale of their own products, often with deceptive offers. Another complaint is that they have lowered the price of products that are not good for health, such as ultra-processed products.
One of the structural problems, evoked by the general director of the Système U chain, Dominique Schelcher, is that many prices today were decided in negotiations with producers at the beginning of the year and there is no flexibility to correct them when the price at origin has fallen , as has happened with sunflower oil, wheat or coffee.
Containing inflation in a visible and publicized way will continue to be a political priority for the French government in the coming months, on pain of aggravating a social malaise that destabilizes the institutions because it encourages extremist populism and violent protest on the street. The “anti-inflation quarter†could be extended into the summer. In this context, the Minister of Economy and Finance, Bruno Le Maire, announced on Friday that the limitation of electricity prices will be maintained until 2025, while it will no longer be necessary to cap the gas price because its level has returned to what had before the Ukrainian crisis.