Unilever Nestle Pepsico have been accused by the government of Emmanuel Macron for refusing to pass on lower prices to families, as Paris struggles to control food inflation that is double digits.
Bruno Le Maire, France’s Finance Minister, targeted the multinationals as he pledged measures to “definitively stop the spiral of prices”.
Paris held talks with food and supermarket suppliers about the cost-of-living crisis. Mr Le Maire announced Thursday that the companies had agreed to reduce or freeze prices of 5,000 products from 2024.
Retailers would be required to immediately pass on lower supplier costs.
Le Maire cited Nestle, the maker of KitKats, Hellmann’s, Unilever, Marmite, and Pepsico as companies that refused to “cooperate”.
He said, “The large multinationals can do more.”
Unilever has been singled out by the Competition and Markets Authority in the UK for scrutiny, due to concerns over so-called “greedflation”.
Last month, the CMA said that high profit margins for branded goods manufacturers deserved further investigation.
In August, the French government announced a deal to reduce inflation. The country’s rate had risen from 5.1pc to 5.7pc. The increase in food prices was 11.1pc and the energy cost rose 6.8pc.
While France was not as affected as other European countries by the rise in energy prices, it is still struggling to control inflation.
French shops are run differently from those in Britain and most other European countries. Food suppliers usually negotiate and fix the price for 12 months starting in March, rather than changing the prices throughout the entire year.
The latest annual deal saw food prices rise by around 10pc on average.
Since then, wholesale prices have dropped and French consumers are paying more than necessary.
Le Maire has struck a deal with supermarkets, suppliers and other companies after a failed attempt to convince them to lower prices in the summer. Retail industry group Federation du Commerce et de la Distribution said that only one third of major consumer goods companies passed on any price cuts.
The recent trend of decreasing price pressures was ended by August’s increasing inflation rate.
The European Central Bank (ECB), led by Christine Lagarde is now in a difficult position as they decide whether to increase interest rates in September in order to combat inflation.
Diego Iscaro is an economist with S&P Global Market Intelligence. He said, “In our opinion, the recent inflation figures increase the probability of another interest rate hike in September.”
“However this is not a done deal and a rapidly deteriorating economy background will still give the doves plenty of ammunition to advocate for a pause.”
Mr Iscaro stated that there is “a high likelihood” that the Eurozone will enter a recession in the second half 2023.
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