French supermarket chain Leclerc has announced plans to freeze the prices of its 120 most purchased items, ensuring the cost of buying them will not change between now (May 4) and July.
Freeze prices on a wide selection of products
The list of products includes rice, coffee, flour, sugar, dairy products, eggs, some fruits and vegetables, fruit juices, diapers, washing-up liquid and other cleaning products and toilet.
If prices need to increase due to minimum profit margins set by French law, the store will refund buyers the difference in vouchers.
This was announced by Leclerc head of strategy, Michel-Edouard Leclerc, who spoke to franceinfo yesterday (May 3) and comes as an attempt to help clients cope with France’s high rate of inflation. .
Leclerc in search of curbing this inflation
“This inflation rate of 4.8% represents a drain of between €150 and €500 per household per year depending on what they buy,” Mr Leclerc said. “Some products have increased by 6-20%, the price of pasta has increased by 20% and some brands of chocolate and coffee are reaching this level.
“We have 4.8% inflation and it will double by summer or during the summer because there is a problem with grain supply and transportation because of Ukraine.”
“Consumers are looking to the state for food vouchers, support, and for us as distributors, it’s our job to try to curb that inflation. »
Mr Leclerc added that while political parties at both ends of the spectrum are asking for reduced VAT or fixed prices on food products, “at the same time, they are not allowing me to sell items cheaper”.
Indeed, the Egalim 1 law of 2018 obliges distributors like Lidl, Leclerc or Auchan to sell food products with a profit margin of at least 10%. In other words, when a retailer buys a product from a producer for €1, he is obliged to sell it for at least €1.10.
While he cannot therefore bring prices down, Leclerc’s price freeze will prevent the costs of consuming common foodstuffs from rising even further.
“If we were to raise prices, we would reimburse people with Leclerc vouchers,” Mr. Leclerc said.
Inflation at a record 3% in April in large supermarket chains like Leclerc
It comes as market research firm Iri revealed that inflation hit 3% year on year in major supermarkets in April and could hit 5% by summer.
In February, the prices of food and toiletries increased at a rate of 0.58% year on year, but in March they rose to 1.49% and in April to 2.89%. For food products alone, the inflation rate was 3.01%.
Supermarket inflation hasn’t been this high in 14 years; in 2008, it reached 4.7% for all products combined.
In addition to pasta, frozen fresh meat prices increased by 11.34% year on year. However, flour 10.93%, oils 9.98% and mustard 9.26%.
“Price increases now affect more than 90% of product categories and are reaching very high levels for more and more items.” Emily Mayer, director of Iri’s Business Insight, told LSA.
Market tensions caused by the war in Ukraine
Food inflation is only expected to rise further as commodity costs remain high and the war in Ukraine adds strain to grain and oil markets.
Mr. Leclerc added that the price increase is also linked to a lack of availability with regard to transport, containers and certain trucks.
Avian flu has affected duck and chicken farms, and therefore eggs too. Energy bills and transport costs also modify the price of French agricultural production.
The prices of meat and fish are increasing very rapidly. All this happened before Ukraine.
“The length and severity of the war in Ukraine will determine the rate at which inflation peaks and how long this episode lasts,” Iri said.
However, some products go against the grain and become cheaper. Like ham (-1.32% in April), diapers (-1.56%) and aperitifs like pastis (-2.87%) whose supermarket price has dropped because it is now calculated before taking into account tax account.
