The French president abandoned moderation and launched the “anti-inflation quarter” program, a package of extreme left-wing measures similar to the “Fair Prices” applied in Argentina and Venezuela.
Far away was the figure of the moderate leader once shown by French Emmanuel Macron.
This Monday, the president of the Fifth Republic announced a package of extreme left-wing measures to “fight inflation”.
In a completely desperate act, and going against his liberal allies in the government, Macron announced a generalized price freeze for 90 days (one quarter) under the “anti-inflation quarter” program with characteristics very similar to those employed in the “Fair Prices” program in Argentina and Venezuela.
The leading French supermarket chains will be affected, mainly Carrefour and Intermarché, which will have to maintain a fixed basket of between 400 and 500 products.
Similarly, the Casino chain deployed its own list of 500 frozen prices for 90 days, which will be in effect as of March 15.
It should be noted that throughout history, each and every fiscal intervention has failed to contain the impact of inflation since the generalized rise in prices is a phenomenon that results from the expansion of the money supply.
“It will be a massive, effective, and protective measure, guaranteeing the lowest possible price on several items, which will be freely chosen by distributors, taking the lowest possible price level from retailers’ margins,” declared Economy Minister Bruno Le Maire.
It is a program that combines the agreement with price control.
Supermarkets are allowed to set their own frozen price lists for 90 days, although they are urged to do so, and as a result, a cost of millions of euros is generated on retail margins.
In return, the Gallic government promises to intercede as a negotiator vis-à-vis wholesale suppliers to offset part of the losses.
“We will reopen commercial negotiations with the major industrialists so that the reduction in wholesale prices, which we are seeing on the markets,” announced the Minister of Economy.
The truth is that this type of program is a sort of temporary patch rather than a medium and long-term solution.
Inflation increased again in February and reached 6.2% year-on-year, the highest since 1985, while in the food item (the most worrying for public opinion), inflation exceeded 14%.
As long as the monetary surplus in the economy is not corrected, nominal demand for all goods and services will continue to increase across the board, and prices will have to adjust upwards.
The European Central Bank raised its interest rate to 3% annually in February but reacted late to inflation.
With information from LGI