A new report from Barclays European Food Retail Equity Research has found that overall food prices in France are down by an average of 0.74% since the start of the year (January to May), compared to a 1.1% decline at this point last year, and a 1.2% decline at this point in 2015.
This, coupled with the fact that private label prices have now moved into positive territory, suggests that 'food inflation [in France] will likely return to positive territory in 4Q at the earliest', Barclays said.
However, the French food retail sector 'continues to be characterized by an intense promotional activity especially from independent operators, including Leclerc', it said.
Across The Formats
In terms of the different store formats, prices were down, however not to the same extent as that seen in previous months.
Food prices at French hypermarkets and supermarkets in May were down -0.37% year-on-year, compared to -0.47% the month before. At French hypermarkets specifically, food prices were -0.49% down, compared to -0.53% the month before, while at French supermarkets, prices were -0.28% down year-on-year, compared to -0.43% the month before.
'Food prices in France were broadly stable in May compared with the month before (-0.10ppt) for the fourth consecutive month,' said Barclays. 'We believe that food prices now factor in the outcome of the annual tariff negotiations between retailers and suppliers that ended in February, suggesting that tariff increases from suppliers were limited this year again.'
Brands Vs Private Label
The prices of national brands were down -0.78% in May, compared to 0.81% the month before, an indication that A-brand prices are starting to recover, if only slightly.
The price of private label products, however, was up 0.36%, compared to an increase of 0.12% the month before.
'National brand products were the only deflationary category last month, while the prices of private labels are now growing for the second consecutive month,' Barclays noted.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
