EU Leans on Businesses to Trim Booming Food Profits

"The next phase in the war against inflation is taking shape in Europe, where governments are actively cajoling businesses to cut prices on everything from pasta to chicken. Their argument: Profits are too high.

The European Union's statistics agency Friday said consumer prices in the 20 countries that share the euro were 5.5% higher than a year earlier, a decline from the 6.1% inflation rate recorded in May, and the slowest increase since the start of 2022.

However, that slowdown in inflation largely has been because of falling energy prices. The core rate of inflation -- which excludes volatile items such as energy and food -- rose to 5.4% in June from 5.3% in May. More concerning for households, food prices continued to rise rapidly, albeit more slowly than in recent months.

After last year's steep energy-price rises normalized, sharp increases in food bills this year have alarmed European governments. Now they are pushing back by putting pressure on grocery stores and food producers to limit or reverse price rises.

Those moves fall short of the price controls that governments introduced in the early 1970s, but edge Europe toward a more interventionist approach on inflation than the U.S., where the pace of price rises has slowed more sharply during recent months.

In France, where food prices have increased by more than 14% in the past year, the government is trying to persuade the country's largest industrial companies to lower their prices.

"We will not allow big industrial companies to make undue margins," French Finance Minister Bruno Le Maire said, adding that he was ready to name and shame companies unwilling to pass on lower costs to consumers.

In the U.K., leading retailers were asked Tuesday to account for their profits before a panel of lawmakers. Wednesday saw the government's treasury chief meet with competition and other regulators to find ways to tackle what is known as the cost-of-living crisis.

The Competition and Markets Authority will publish the results of its investigation into food prices in July. The Bank of England will meet with food producers ahead of its September decision on interest rates.

"We are working hard to halve inflation this year," said Jeremy Hunt, the treasury chief. "Businesses must play their part, too, and I will keep a watchful eye on the progress they make."

So far, only Croatia and Hungary have implemented price caps. In September 2022, Croatia's government imposed a 30% cut in the prices of oil, flour, sugar, pork, chicken and milk. Last week, Hungary's government announced the extension until August of caps on the prices of a similar range of food staples." [1]

 

And Lithuania? what you We are ancient Indo-Europeans, almost like from India. We worship sacred cows. They are called the margins of Maxima, SEBo and other such institutions.

 

1. World News: EU Leans on Businesses to Trim Booming Food Profits. Hannon, Paul;
Bisserbe, Noemie. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 01 July 2023: A.7.