French shoppers should pay less for their food now!

French shoppers should pay less for their food from next month, Finance Minister Bruno Le Maire said on Friday, after he secured a pledge from 75 top food companies including Unilever to cut prices on hundreds of products.

The companies, which together make 80% of what the French eat, could face financial sanctions if they don’t follow through, Le Maire said.

The government is furious that supermarket prices have hit record levels in recent months even though the costs of many raw materials used by food producers have been declining.

The finance minister has previously threatened to claw back what he described as “undue” profits from food companies with special taxes if they did not pass on their own lower costs to consumers already struggling with high energy bills.

“As soon as July, prices of certain products will go down,” Le Maire told BFM TV on Friday, after meeting food industry representatives a day earlier.

“There will be checks and there will be sanctions for those who don’t abide by the rules.”

Le Maire said pasta, poultry and vegetable oil were among products on which prices will be cut. The costs of beef, pork and milk would not be affected by the move, he said.

While the pace of food price rises has been slowing across the euro zone, it is the main factor keeping inflation high. The European Central Bank, which is expected to raise interest rates again next week even though growth is very weak, has said high corporate profit margins are also an inflation risk.

Euro zone inflation fell more than expected in May but is still more than three times the ECB’s 2% target.

High food prices are a concern for European governments from Britain to Italy, but France has been among the most aggressive in pushing price cuts. In Hungary, Prime Minister Viktor Orban has imposed mandatory price cuts on some basic food items.

Supermarket chains across Europe say shoppers are voting with their feet and opting for cheaper private label alternatives to branded food products.

France’s Carrefour has an “anti-inflation button” on its website that shows customers cheaper alternatives to products, often pointing them to own-brand groceries.

According to a survey by Euromonitor, 22% of Europeans said they plan to increase their purchase of private label products in 2023, up 5 percentage points from last year.

NAME AND SHAME

Le Maire said if the food companies do not live up to their promise to cut prices, he could publicly “name and shame” them.

“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%,” he said, adding that he would have a full list of products affected next week.

Unilever, the maker of Hellmann’s mayonnaise and Knorr soup, said it was one of the 75 companies the government said should cut prices next month.

“We confirm our participation in ongoing discussions with the Ministry of the Economy and all stakeholders, including retailers, to identify the best actions to serve the purchasing power of the French, in this context of high inflation,” a Unilever spokesperson told Reuters.

Grocer Auchan declined to comment, while Nestle, Danone, Kraft Heinz and Pepsico did not have an immediate comment.

French annual inflation cooled more than expected in May to its lowest level in a year at 6.0% as energy and food price increases moderated. But food prices were still up 14% last month.

March saw a record spike of almost 16% in French food prices after food companies and big retailers agreed an average 10% increase in prices, responding to a surge in input costs after Russia’s February 2022 invasion of Ukraine and to higher wages.

Higher costs have hit appetites among the food-loving French, whose spending on food, adjusting for inflation, has fallen to its lowest level since March 2009, according to data from the INSEE statistics agency.

The food industry has meanwhile seen profits surge, largely making up for sharp falls during the pandemic, Le Maire said. The industry’s operating profits were up 15% in the first quarter from the previous quarter, INSEE data shows.