French consumers forced to cut back on essentials, Carrefour CEO warns

Alexandre Bompard, Chairman and Chief Executive Officer of French retailer Carrefour, attends the MEDEF union summer forum "La Rencontre des Entrepreneurs de France, LaREF" at the Paris Longchamp Racecourse in Paris, France, August 30, 2022. REUTERS/Sarah Meyssonnier Acquire Licensing Rights

PARIS, Aug 29 (Reuters) - The CEO of French retailer Carrefour (CARR.PA) on Tuesday warned that high prices have forced consumers to make massive cuts to spending on essential goods, and urged the government to delay a law putting a cap on promotions retailers can offer.

"We are seeing a non-spending tsunami in France," Chairman and Chief Executive Alexandre Bompard told Franceinfo radio. "When essential staples are no longer accessible, when people go without essential goods, one must act."

The comments, which sent Carrefour shares down more than 4%, were the latest salvo in a blame game between the French government and retailers on who is responsible for the increase in the cost of living.

As Europe's inflation shock eases, France is seeing less of a retreat in prices than many countries due to a surge in food inflation since March after annual price negotiations between retailers and producers.

The government is eager to get food inflation - more than twice the overall French inflation rate of 5.1% in July - on a downward path, wary that such high levels could undermine fragile consumer confidence.

Household confidence remained stable for the third month in a row in August, but was well below its long-term average, according to a monthly survey from the INSEE statistics agency.

Bompard, who is among French retail executives due to meet Finance Minister Bruno Le Maire on Wednesday to discuss how to lower prices, said he would ask for a one-year moratorium on the application of the law, which is currently scheduled to take effect next March.

The so-called Descrozaille law, which was passed in March this year, extends a limit of 34% on promotions that retailers can apply to food items to beauty, hygiene and care products.

Bompard, who has slashed prices to win back shoppers in the face of stiff competition, said that while today Carrefour is free to sell washing powder at a 60% discount, it would no longer be able to do so when the law takes effect.

The law's stated aim was to protect small producers in price negotiations with retailers.

Retailers like Carrefour, however, say it limits their bargaining power with large suppliers, and Bompard on Tuesday said the new rules benefit only global multinationals like Procter & Gamble (PG.N), Henkel (HNKG.DE) and Unilever (ULVR.L).

"They see their margins increase while the French are in a situation of deprivation," Bompard told Franceinfo. P&G, Unilever and Henkel did not immediately respond to requests for comment.

Le Maire in March secured pledges from 75 food producers to cut prices on hundreds of products, but a junior minister last month said that only about 40 had made good on their promise.

On Tuesday, Le Maire vowed to step up pressure on retailers and producers to accelerate price cuts.

"We are on the right track," he said. "Prices are now falling because we have intervened, because we put pressure on retailers and producers and because we will continue to do so."

"I am meeting retailers tomorrow and the producers the day after tomorrow ... with one objective: accelerate the fall of prices."

Le Maire said he would ask them to widen the range of products on which prices can be cut, and also said he wanted more producers to play ball.

"There are 35 today. I think we can have more producers joining us in this fight against the high cost of living," he said.

Reporting by Dominique VidalonAdditional reporting by Geert de Clercq; Editing by Silvia Aloisi, David Goodman and Conor Humphries

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