Ottawa is raising its voice against the big supermarket chains. After listening to their explanations and justifications of all kinds last spring, the government is now requiring them to take “significant actions” to stabilize or even reduce the price of food. Otherwise, there will be “consequences”, promises Justin Trudeau.
” Enough is enough ! », said the Minister of Innovation, Science and Industry, François-Philippe Champagne, at a press conference alongside the Prime Minister. Like a parent who no longer has patience with an unruly child, they increase the pressure to make things happen using various tactics.
So, starting next Monday morning, the CEOs of the five giants – Loblaw, Sobeys, Costco, Walmart and Metro – will have to meet with the minister to discuss the price of food for an hour. It is not an invitation, but a summons, he insisted, as if to establish his authority.
The deadline is surprisingly short, which will force many schedule changes. This haste perhaps serves to send the message that the matter is urgent and that the government is more serious than ever. However, food inflation in supermarkets was much higher last fall and winter, at 10 or 11%. Since March, it has been in constant decline.
But the government sees clearly that Conservative Leader Pierre Poilievre’s obsession with the rising cost of living does not follow the same curve. On the contrary, it is increasing, which serves his popularity well, if we trust the polls.
Consumer discontent is also not falling at the same rate as inflation. The price of food is even – by far – the current topic most discussed by Quebecers with their loved ones, after climate change and the price of gasoline, according to a recent Léger survey.
This is not unjustified, mind you. The latest statistics for the month of July show an annualized increase in food prices of 8.5%. This is still very high, and this is on top of the increases in previous years, which puts enormous pressure on the backs of the least well-off households.
Even if the big bosses of the five major supermarket chains have already told elected officials that they can do nothing to prevent the global phenomenon of inflation and that they are not profiting from it at the expense of consumers, it is clear that there are skeptics. Starting with the Prime Minister himself.
“We know they can do more and they need to do more to make food cheaper,” he said. Thus, retailers will have to come up with a plan between now and Thanksgiving to “relieve the middle class”. If the government is dissatisfied with the result, it promises to take action, but gives little detail on the “consequences” it would impose. “We are not excluding anything, including tax measures. »
Faced with this vague threat, will retailers pull out of their hats effective tools to stabilize grocery prices that have never been used until now? If they did so, they would prove right all those who have accused them for two years of causing inflation by increasing prices to benefit their profit margin and to the detriment of consumers. It is difficult to imagine how they could develop a strategy that would cause them to lose face to this extent.
From the start, CEOs have insisted that they are not responsible for the rise in food prices, a global phenomenon caused by climate change, the war in Ukraine and the cost of energy, in particular. They also claim that the price increases come from suppliers.
In May, Loblaw even accused multinationals of passing on “excessive” increases that were higher than those of smaller companies.
“Solutions must involve everyone. Not just the last link in the chain,” Michel Rochette, president of the Quebec branch of the Retail Council of Canada, the association that represents major retailers, told me.
In fact, it is a little curious that Minister Champagne did not also summon the suppliers. He defended this by saying that supermarkets had an overview of the industry. Yet it is inspired by France’s initiatives, and there the government has brought together a handful of retailers and dozens of suppliers to jointly find solutions to the inflationary spiral. They agreed to establish a list of 5,000 products whose prices will be frozen or reduced. It remains to be seen whether the measure will change anything for the French, but at least the effort is collective.
French retailers are also taking their own anti-inflation initiatives. Carrefour identifies on its shelves the products affected by reduplication (fewer biscuits in the package for the same price). Does this public humiliation serve the consumer? That remains to be proven. And in Canada, a small market would be risky.
Suppliers who are singled out could do like Kleenex and leave, reducing the competition that helps control inflation. The particularities of Canada must be taken into consideration by Minister François-Philippe Champagne.
Ottawa’s pressure on supermarkets will probably not significantly reduce our grocery bill this fall. But by indirectly meddling in the price of Corn Flakes, the Trudeau government is showing that it cares about the budget of the middle class. For him, it is just as important.