Even if inflation drops, your butter will not return to its soft price before

CONSUMPTION – Even when unsalted butter is salty. In March 2023, inflation was recorded – for the eleventh consecutive month – around 6%, with food prices up 15.8% year on year. That same month, an Internet user relayed on Twitter a photo of a 500-gram lump of butter at the price… of 7.18 euros.

« At that price the butter it… exclaims the surfer in legend. Meaning: there is bound to be something magical in a half-kilo wafer for more than 7 euros. The sentence has become a real gimmick and perfectly illustrates why, in the supermarket, some French people have the impression of being in an alternate reality.

« Consumers no longer have any cognitive benchmarks on prices. We all feel like we know roughly how much a product should cost, but right now, it’s a waltz of labels “, explains to HuffPost Florence Jany-Catrice, professor of economics at the University of Lille, author of consumer price index (Discovery).

Go higher, go higher

This waltz of labels is not about to replay the choreography of a year ago, alerted this Thursday, May 11 Michel-Édouard Leclerc, boss of the E.Leclerc centers. Guest of BFMTV, he called not to ” To sell dreams to consumers. ” We will never go back to the prices before”, he asserted. His colleague from System U, Dominique Schelcher, did not say anything else this Friday on the same channel.

And unfortunately for the most precarious, if the two bosses are actors in the inflationary file, believes Florence Jany-Catrice, they are also lookouts, and their diagnosis is correct. For the economist, it is already almost too late for food prices to come down quickly.

« We are almost already in the second round of this inflation. As long as a price increase is not followed by a general cost increase [de production], we can imagine that prices could go back down to previous levels. There, the problem is that wages, in the sectors where it is possible, have already been renegotiated upwards, or adjusted with bonuses. Although this does not fully address the loss of purchasing power », Explains Florence Jany-Catrice.

Contacted by Le HuffPostTobias Broer, economist at the Paris School of Economics, agrees: “ Once wages have increased, labor costs weigh even more heavily on the business economy (…) it prevents a return of the price to its previous levels”. According to the government site Viepublique.fr, branch wage negotiations in 2022 resulted in a wage increase of 5% on average. Not necessarily enough to offset food price inflation.

Inflation is the others

If prices will always be better before, can we at least count on a slowdown in inflation? On food, Bruno Le Maire (Economy) and Olivia Grégoire (Commerce) ensure that yes, and point in turn to summer or back to school for visible slowdowns.

The two members of the executive want things to go quickly when, for the moment, the fall in raw materials does not seem to be reflected in the neon lights of the supermarkets. ” Between the moment when the prices of the raw material drop and the moment when it shows on the label, there are negotiation times. “recalls Tobias Broer.

The economist is however optimistic for the future: “ We cannot stay with prices at +10 or +15%. I believe that we will still see a very strong slowdown in prices in the second half of 2023, in particular for the products which have increased the most and which are more linked to international markets: oils, cereals… On the other hand, a lesser fall in prices is expected where labor costs play an important role ».

Olivia Grégoire nevertheless threatened to “name and shame” the “brands that don’t want to bargain down”. With his colleague from the Economy, they intend to bring around the table the actors of the large distribution and the agri-food industrialists during a new meeting before June 15.

At the motte of our house

Florence Jany-Catrice also evokes another track to explain price reductions that do not happen. “The other question which also agitates economists a lot, without having sufficiently formal indicators, is the suspicion of greed-flation, that is to say that we are not in a price/wage but price/profit loop “, she points. Concretely: that companies take advantage of inflation to increase their prices and margins excessively.

While the effects of the war in Ukraine or the Covid-19 crisis seem to be losing influence, the economist does not want to lose sight of the structural factors of inflation. In his line of sight, the role of climate change in our economies.

« Digital is considered – wrongly in my opinion – as a strong lever for the transition. However, it consumes a lot of rare metals, which is likely to generate an inflationary phenomenon. It’s the same for megafires and the wood sector, for drought and hydraulic energy. There are also factors linked more directly to the transition policy and in particular to the relocation policy. The low inflation we had for 30 years is also linked to globalization », Details the economist. From the lump of butter to the lump of earth, the recipes are the same.

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