2023-09-09 08:00:03
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understanding of the mechanisms generating this surge (energy crisis, war in Ukraine, disruptions in supply chains) has been replaced by an impatience which is transforming into distress for the most vulnerable.
According to the latest Secours populaire barometer, more than a third of French people no longer have the means to eat three meals a day, not to mention the crisis at Restos du coeur. 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 result in shortages and dysfunctions appearing 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
However, it is difficult to be satisfied with the calming speech of the major agri-food brands, affirming that the price increases they practice are only the repercussions 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 agri-food sector, 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 pushing cynicism to reduce the size of the containers of their products to better convey 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 price negotiations between mass distribution and the main manufacturers of consumer products, in order to realize the drop in the prices of certain components, provoked a reaction from manufacturers. Even if the technical obstacles they invoke are overcome, nothing says 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 fueling inflation and the responsibility of companies to fairly pay their employees, the 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.
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