French supermarket chain E.Leclerc has announced that it plans to freeze prices on its 120 most-bought items, guaranteeing that the cost of buying them will not change between tomorrow (May 4) and July.
The list of products includes rice, coffee, flour, sugar, dairy products, eggs, certain fruits and vegetables, fruit juice, nappies, washing up liquid and other cleaning and toiletry products.
If the prices have to rise due to minimum profit margins set in French law the store will reimburse shoppers the difference in vouchers.
This was announced by E.Leclerc’s head of strategy, Michel-Edouard Leclerc, who was speaking to Franceinfo today (May 3) and comes as an attempt to help customers cope with France’s high inflation rate.
Read more: French inflation at 4.8% year on year to April
“This 4.8% inflation rate is a drain of between €150 and €500 per household [per year] depending on what they buy,” Mr Leclerc said. “Some products have gone up by between 6 and 20%, pasta [prices] have increased by 20%, and some chocolate and coffee brands are reaching that level.
“We have 4.8% [inflation] and this will double by the summer or during the summer because there is a problem with cereal [supply] and transportation because of Ukraine.
“Consumers are turning to the state to ask for food cheques, support, and for us as distributors it is our job to try to curb this inflation.”
Mr Leclerc added that while political parties from both ends of the spectrum are calling for reduced VAT or fixed prices on food products, “at the same time they are not allowing me to sell [items] more cheaply.”
This is because the Egalim 1 law of 2018 obliges retailers such as Lidl, Leclerc and Auchan to sell food products with at least a 10% profit margin. In other words, when a retailer buys a product from a producer for €1, it is obliged to sell it for at least €1.10.
Read more: Leclerc boss wants to end 10% profit margin on supermarket foods
Although it cannot therefore bring prices down, E.Leclerc’s price freeze will prevent consumer costs on common food items from rising even further.
“If we did have to increase prices [because of profit margin requirements], we would reimburse people with Leclerc vouchers,” Mr Leclerc said.
Inflation at record 3% in April in big supermarket chains
This comes as market research company Iri has revealed that inflation reached 3% over a year in big supermarkets in April, and could rise to 5% by the summer.
In February, food and toiletry prices were rising at a rate of 0.58% over a year, but in March this increased to 1.49% and in April to 2.89%. For food products alone the inflation rate was 3.01%.
Supermarket inflation has not been at such a high rate for 14 years; in 2008, it reached 4.7% across all products.
As well as pasta, fresh frozen meat prices have risen by 11.34% over a year, with flour up 10.93%, oils up 9.98% and mustard up 9.26%.
Read more: French supermarket price wars continue as shoppers try to save money
“Price rises are now affecting more than 90% of [product] categories and are reaching very high levels for more and more items,” Iri’s Business Insight Director Emily Mayer told LSA.
Inflation on food products is only set to increase further, as raw material costs remain high and the war in Ukraine adds strain to the cereal and oil markets.
Mr Leclerc added that increasing prices are also linked to a “lack of availability with regards to transports, containers and certain lorries.
“Avian flu has affected duck and hen farms, and therefore eggs as well. Energy bills and transportation costs are also changing the price of French agricultural production.
“Meat and fish [prices] are increasing very rapidly. All of this was happening before Ukraine.”
“The duration and gravity of the war in Ukraine will determine the rate at which inflation peaks and how long this episode lasts for,” Iri has stated.
However, there are some products that are bucking the trend and becoming less expensive, including ham (-1.32% in April), nappies (-1.56%) and apéritifs such as pastis (-2.87%), whose supermarket price has come down because it is now calculated before taxes are taken into account.
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