France accuses Unilever and Nestle of refusing to lower prices

Emmanuel Macron’s Government has accused Unilever, Nestle and Pepsico of refusing to pass lower costs on to families as Paris battles to control double-digit food inflation.

Bruno Le Maire, France’s finance minister, singled out the multinationals for criticism as he promised measures to “definitively break the price spiral”.

Paris has held talks with supermarkets and food suppliers over the cost of living crisis and Mr Le Maire announced on Thursday that companies have agreed to cut or freeze the price of 5,000 items from the start of 2024.

Under the deal, retailers would be obliged to pass on the lower costs from suppliers immediately.

However, Mr Le Maire singled out KitKat-maker Nestle, Hellmann’s and Marmite-owner Unilever and Pepsico, which manufacture Doritos and Quaker Oats among others, as major companies that have refused to “cooperate”.

He said: “The large multinationals could do much more.”

Unilever is among a number facing scrutiny from the Competition and Markets Authority (CMA) in the UK, amid concerns about so-called “greedflation”.

The CMA last month said the high profit margins of branded goods manufacturers warranted further investigation.

The French deal came as new figures showed inflation in the country rose to 5.7pc in August, accelerating from 5.1pc in July. Food prices were up 11.1pc on the year and energy costs rose 6.8pc.

While France did not suffer as badly as other European nations from the spike in energy prices last year, the country is now struggling to get inflation under control.

French shops operate in a different way to those in Britain or most other European countries. Instead of changing prices throughout the year, food suppliers instead typically negotiate and fix prices for the 12 months from March.

Food prices rose by an average of around 10pc under the most recent annual deal.

Wholesale prices have fallen since then, leaving French shoppers paying higher than necessary prices.

Mr Le Maire’s deal with supermarkets and suppliers follows a previous effort to persuade companies to cut prices this summer. Retail industry group Federation du Commerce et de la Distribution (FCD) said only one-third of the major consumer goods companies had passed on any cuts.

August’s rising inflation figure helped keep eurozone inflation overall steady at 5.3pc, ending the recent run of declining price pressures.

It leaves the European Central Bank, led by Christine Lagarde, in a tight spot as it considers whether or not to raise interest rates again in September to battle inflation.

Diego Iscaro, economist at S&P Global Market Intelligence, said: “In our view, the latest inflation figures raise the probability of a new increase in interest rates in September.

“However, this is far from a done deal, and a rapidly deteriorating economic background will still give doves in the ECB’s Governing Council plenty of ammunition to argue for a pause.”

Mr Iscaro said there was “a high probability that the Eurozone economy will enter a technical recession during the second half of 2023.”