Inflation has been making a dent in homes for almost a year. And more specifically, in their pockets. He has skyrocketed the cost of food throughout Europe at a time when the purchasing power of families has been drastically reduced. And, despite the fact that governments have applied anti-inflation measures, consumers have been forced to reduce their purchases in supermarkets by almost 20%. To alleviate these effects, the Government of Spain lowered the VAT on staple foods a few months ago. But not much has changed.
There are countries that believe that this measure is not enough and have gone further. Yesterday the French Government reached an agreement with distributors to cap the price of many products and create an anti-inflation basket.
The French measure. In this case, the French supermarket chains have agreed offer its customers food and basic necessities at the lowest possible price for three months. But each company will have the freedom to define its own basket of products and to set its price. According to the Minister of Economy and Finance, Bruno Le Maire, the measure will cost these companies “several hundred million euros.”
That is, it will be each chain that chooses the top and the products. The conditions set by the government is that these prices They must be as low as possible, but never at the expense of the producer, but it will be at the expense of the margins of the distribution itself. And all must wear a badge so that the consumer can easily recognize them in the supermarket: the French flag and a label that says “anti-inflation quarter”.
As? This basket will contain, as planned by the French Ministry of Commerce, fresh products, dairy products, pasta and also hygiene items. In total, each distributor will define a list of 20 products. And the government has reported that the French anti-fraud services will be in charge of monitoring that the agreement is fulfilled under the established conditions. Especially the part of “at the lowest possible price”, without cutting taxes or benefits to third parties.
This route is included in the joint effort that the neighboring country and its companies are making to contain inflation, promoting other initiatives such as a ceiling on fuel. Some days ago, Total Energies agreed not to sell diesel gasoline for more than 1.99 euros per liter at French service stations.
Because? To stand up to inflation, which reached 14.5% in February compared to last year in France. The country has seen food prices rise by 12%. And meanwhile, these days the streets are experiencing a wave of strikes and massive demonstrations for the pension reform. Macron fears that all this added to the loss of purchasing power of citizens settle with a new yellow vest protest, like the one that broke out in 2018 due to the rise in the price of gasoline.
In Spain. Here the rise in the price of food has generated a constant debate with several proposals on the table. Finally, the Government ended up approving a few months ago the VAT reduction to basic products. However, the new French measure has been welcomed today by Vice President Yolanda Díaz, who insists that it has been since last summer trying to promote a similar measure and that may be very feasible and “essential” in Spain.
In fact, he defends the possibility of creating “a basket of products, whatever they may be, with a limited price” and has referred to the Article 13 of the Retail Trade Lawwhich endorses the option of setting prices in the case of the marketing margins of certain products to point out that this intervention is “one of the pending subjects”.
Is it legit? Anti-inflation baskets are synonymous with controversy, basically because they mean intervening in prices. In Spain, the National Competition Market Commission (CNMC) already was against Yolanda Díaz’s proposal to cap prices of staple foods. In fact, the president of the organization, Cani Fernández, upon learning of the French news has been skeptical about the possibility of bringing a similar agreement to Spain.
“Price fixing agreements are prohibited by competition regulations and the fact that they are promoted by a public authority does not exempt the operators or the public authority itself from responsibility”, explained. “How do you eat this with the Food Chain Law in Spain?”, he wondered, remembering that this law prevents lowering the price from one part of the step to the next.
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