French finance minister Bruno Le Maire singled out multinational corporations for criticism, promising measures that would «finally break the price spiral.» Photo: Eric Piermont/AFP
Emmanuel Macron's government has accused Unilever, Nestle and Pepsico of refusing to pass on spending cuts to families as Paris struggles to control double-digit food inflation.
Bruno Le Maire, French CFO The minister singled out multinational corporations for criticism, promising measures that would “finally break the price spiral.”
Paris has been in talks with supermarkets and food vendors over the cost of living crisis, and Mr Le Maire announced on Thursday that companies have agreed to cut or freeze prices on 5,000 items from early 2024.
Under the agreement retailers will be required to immediately pass on the lower costs to suppliers.
However, Mr. Le Maire singled out KitKat maker Nestle, Hellmann's and Marmite owners Unilever and Pepsico, which make Doritos and Quaker Oats among others like big companies that refused to «cooperate.»
He said, «Large multinational corporations could do much more.»
Unilever is among those under scrutiny. from the UK Competition and Markets Authority (CMA) amid worries about so-called 'greedy inflation'.
Last month, the CMA said the high margins of branded goods makers need further investigation.
< p>The deal with France came after new data showed the country's inflation rose to 5.7% in August, up from 5.1% in July. Food prices rose 11.1% year-over-year and energy costs rose 6.8%.
Although France has not been hit as hard as other European countries by the spike in energy prices, energy products last year, now the country is struggling to get inflation under control.
French stores operate differently than stores in the UK or most other European countries. Instead of changing prices throughout the year, food vendors typically negotiate and fix prices for 12 months starting in March.
Food prices have risen about 10% on average in line with the last annual agreement .
Wholesale prices have since fallen, causing French buyers to pay more than they should.
Mr. Le Maire's deal with supermarkets and suppliers follows previous attempts to persuade companies to cut prices this summer. The retail group Federation du Commerce et de la Distribution (FCD) said that only one-third of the largest consumer goods companies have agreed to any cuts.
Rising inflation in August helped keep eurozone inflation in generally stable at 5.3%. , ending a recent series of price cuts.
This puts the European Central Bank, led by Christine Lagarde, in a quandary as it decides whether to raise interest rates again in September to fight inflation.
Diego Iscaro, Economist at S&P Global Market Intelligence, said: «In our view, the latest inflation data raises the possibility of another rate hike in September.»
completed deal and the rapidly deteriorating economic situation will continue to give the doves in the ECB Governing Council enough reason to argue in favor of a pause.»
Mr Iscaro said that «there was a high possibility that the economy the eurozone will enter a technical recession in the second half of 2023.”
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