En this new school year, inflation on food products has become one of the major concerns of the French. Rightly so: the price increase peaks at more than 21% over two years. A relative understanding of the mechanisms generating this surge (energy crisis, war in Ukraine, disruption of supply chains) has been replaced by an impatience that turns into distress for the most vulnerable.
According to the latest Secours Populaire barometer, more than a third of French people can no longer afford to eat three meals a day, not to mention the Restos du Coeur crisis. The situation is all the more tense since the government had imprudently announced a decline in prices at the end of the summer. Here we are, and consumers still don’t see anything coming.
The government’s room for maneuver is narrow. Bercy has no control over energy prices or agricultural raw materials prices. As for a control of consumer prices, as envisaged by part of the left, it would only lead to the appearance of shortages and dysfunctions which would inevitably result in more inflation. Hungary’s experience shows that, in an open economy, this type of remedy turns out to be worse than the disease.
The ridge line is narrow
Difficult for all that to be satisfied with the soothing speech of the big brands of the food industry, affirming that the tariff increases which they practice would be only the repercussion of the increase in their costs. As noted by INSEE, the corporate margin rate has been increasing for three quarters. The trend is precisely visible in the food industry, where companies did not hesitate to continue to increase their prices in the second quarter, while the prices of raw materials and energy fell significantly.
Even if these figures hide contrasting situations, the fact that a handful of players are taking advantage of the situation to reap profits disconnected from economic reality is not tolerable. Some are even cynical about reducing the size of the containers of their products to better pass on price increases to consumers. These are short-sighted calculations. Customers are starting to turn away from certain brands that abuse their ability to impose their price. The fall in sales is ultimately the only language they can understand.
The idea pushed by the government to bring forward the date of tariff negotiations between large retailers and the main manufacturers of consumer products, in order to concretize the fall in the prices of certain components, has provoked a broca on the part of industrialists. Even if the technical obstacles they cite would be overcome, there is nothing to say that this high mass will lead to a spectacular drop in prices. Oil prices are rising and those of agricultural raw materials remain volatile. The only certainty: prices will not return to their pre-crisis levels.
Raising wages remains the only lever that would reduce the pressure. But, between the risk of entering a vicious circle feeding inflation and the responsibility of companies to fairly remunerate their employees, the crest line is narrow. The effort must primarily focus on low wages. In this context, the social conference that Emmanuel Macron has just announced is of crucial importance.