Bread prices in France gone up

Baguette - French bread

In early September, bread and cake prices began to increase in Parisian bakeries. The French baguette is often considered as the indicator for inflation and purchasing power in France. Increases in the price of bread caused politicians to argue for increased competition and for retailers to enforce price rises that they've been looking for, for some time.

I’m at a bakery in central Paris to look at French bread – the baguette. The price of bread is set to increase and since the average French household spends 400 euros a year on bread and cakes, people are concerned. Behind this is the fact that cereal prices and so flour prices are going up all over the world. Here’s a summary of the reasons for this around the globe.

“Extreme weather conditions have damaged harvests, the bio-fuels industry is turning American farmers away from wheat production, and global reserves of cereals have not been maintained. Alongside this drop in supply, is an increase in demand. Asian countries are now eating more meat and drinking more milk products and so China and India are now importing vast amounts of cereal for animal feeds.”

French bakers are reacting to this by hiking prices. Local bakers have already raised prices and supermarkets may soon follow suit. Philippe Bodard, PR Director of France’s Federation of Bakers, says an increase in bread prices has been coming because the leap in flour prices has been so extreme.

“It’s a rise of over 50% in flour prices. Given that cereal prices have doubled in a year, we have rises of 100%. The flour miller who met this rise before us, passed these price rises on to us and we’re obliged to transfer them on to our customers.”

Local bakers have already raised prices and supermarkets may soon follow...

But a French consumer group does not agree. The CLCV ran a study to investigate whether these price increases were really justified.

“We visited a hundred bakeries and collected prices from all around Paris and we wanted to compare prices from one bakery to another and we also focused on differences between the different types of bread.”

That was Charles Pernin, of the CLCV, who wrote the report – he says that bakers are talking about an increase of 5 to 8 % in the price of the French baguette because of the increased cost of wheat and flour. But he’s not convinced.

“In our opinion this is not a sound argument. Wheat costs only represent 4 to 5 % of bread prices. Therefore the current raise in wheat prices should lead to an increase in bread price by 1 to 1.5 % and no more. During the last fifteen years, wheat has become cheaper while bread prices have risen by 50 %.”

The consummers will have to pay more for the from now on...

Philippe Bodard agrees that there is more to the rise in bread prices than just the increase in world cereal prices and cites rises in overheads and in France’s minimum wage.

“The minimum wage went up 24% between 2002 and 2007 – 24%! The cost of living went up by 10%, the price of bread by about 10 or 11% in local bakeries and about 6% in industrial bakers. So you see we are within the cost of living – the minimum wage has increased much more than the cost of living.”

French President Nicolas Sarkozy had lots to say during his election campaign about “purchasing power” so the rise in the price of the baguette, may cause him some worry politically. The Prime Minister, François Fillon, has says he aims to fight price rises by encouraging competition between supermarkets. But Serge Papin, Head of the Supermarket group System-U says that supermarkets are already in stiff competition with each other

“I should remind you that the food budget is only 15% of household expenses. There are expenses which are much bigger – accommodation which is 25% of the household budget, or transport, which is 15%. We feel that competition is working. I believe we’re doing our job and that the calls for magic solutions need to stop. Even if it is symbolic, food spending cannot be the solution to the entire problem of purchasing power.”