Political leaders unprepared for rising inflation, French supermarket mogul says

Political leaders are ill-prepared to deal with rising prices while combatting opportunistic inflation should be a priority in the months ahead, Michel-Edouard Leclerc, president of the E. Leclerc cooperative, one of the largest supermarket chains in France, said in an interview with EURACTIV.

Read the original interview in French here

France’s overall inflation rate is 5.8% as of September, but the cost of food is expected to increase by some 12% by the end of the year. The general economic outlook is no better, as while growth should reach 2.7% in 2022, it will fall to 1% in 2023 – a figure the French Central Bank finds “optimistic” and far above its own 0.5-0.8% estimates.

Leclerc said some of the blame for the current situation lies with a European elite who “grew up through deflationary times and never experienced inflation” combined with under-preparedness.

In addition, while data from 2021 gave warnings of rising prices, the French Central Bank and European Central Bank did not react.

This led to a situation where “a large majority of companies used the excuse of the war in Ukraine to change the narrative over where inflation comes from”, something Leclerc calls opportunistic inflation.

“Governments have focused on compensating the impact of inflation on families and households”, although “we need to enter combat mode against opportunistic inflation”, he said.

On the topic of “solidarity contribution”, an idea European Commission President Ursula von der Leyen introduced in her state of the union speech on 14 September, Leclerc was not convinced.

“I don’t think consumers would benefit. I’d rather look for greater market regulation through price ceilings or functioning competition rules”.

That said, Leclerc stressed he was “shocked when I see the margins some companies make: those companies that received state help over the COVID crisis. People are angry and confused, and I’m worried some company leaders ignore that this may pose a risk”.

State intervention to control the increase in energy prices has been considerable across the EU. This is particularly true of France, which experienced the lowest inflation rate in the entire eurozone. But Leclerc believes this should also be implemented for companies.

Food sovereignty and agriculture

On the topic of food sovereignty, Leclerc said it “is crucial, but we’re not asking ourselves the right questions”, adding that the EU’s farming subsidies programme, the Common Agricultural Policy,  “has a key role to play if only it can be tweaked to accommodate new ways of production”.

In addition, he said, greater harmonisation is needed within the EU to avoid tensions between producers.

“Tensions exist in-between EU producers. A French producer may sometimes struggle to compete against their Spanish, German or Polish counterparts because of lower production costs or larger production plants.”

Taking a different stand than food producers, he praised the European Parliament’s recent adoption of a compromise text to include maise, poultry and pig meat in the EU’s new law against imports linked to deforestation – a move food industry representatives have largely criticised as having the potential to fuel supply chain shortages and price inflation in the EU.

“It’s a good thing. We continually speak to NGOs on this matter and have taken steps to ensure imported goods such as soya do not contribute to deforestation”.

[Edited by Alice Taylor/Zoran Radosavljevic]

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