‘It is madness’: Inflation warning as supermarkets face discounts cap

Supermarkets in France are set to be restricted over how much they can discount hygiene products such as nappies, shampoo and shower gel amongst others.

A small cross-party commission of French senators and MPs agreed on an experimental measure that would stop stores from offering more than 34% off.

A majority of MPs and senators are expected to approve the bill next week.

Critics say the 34% discount limit, which already applies to food items, was “madness” at a time when households are struggling with rising inflation.

Read more: Senators back ending 2-for-1 deal on toiletries in French supermarkets

But the commission took a different view, arguing that “shock promotions” of more than 34% “destroy value for hundreds of small and medium businesses”, are “almost entirely paid for by producers”, and lead them to receive “extremely low” returns or even “produce at a loss”.

The group defended suppliers and said that they were aiming to address the “power imbalance in commercial negotiations”. The move would also “enable us to ensure fair pay for farmers [and suppliers], and fill in economically-unstable legal loopholes for businesses”.

Read also: French supermarkets begin drive to keep prices down on selected range

‘Not the right moment’

The supermarket and shopping sector has -- perhaps unsurprisingly -- not welcomed the bill.

Union la Fédération du commerce et de la distribution (FCD) called the measure “irresponsible and inflationist”. It said limiting money-off deals to 34% would “hit people in France most in difficulty and grow the margins of a few giants in the sector for no reason”.

Economics professor at Paris Cité University, Philipe Moati, told Europe 1 that “it seems that now is not the right time” to introduce such a law. He said: “We’re going through a period of inflation that is weighing on households’ purchasing power, so it’s not the right time to be adopting laws that go against this.”

In February 2023, it emerged food prices had risen on average 14.8% in just a year.

The president of the supermarket brand Système U went further and said the government’s decision was contradictory and sent mixed messages.

Dominique Schelcher said on Twitter: “It is madness! On the one hand, they’re asking us to implement an ‘anti-inflation trimestre’, that we’re implementing immediately. And on the other hand, they’re voting for a measure to limit promotions?”

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