France to permit sale of fuel below cost to combat inflation

In an effort to reduce home inflationary pressures, the French government intends to temporarily waive a ban on merchants selling fuel below cost, Prime Minister Elisabeth Borne told newspaper Le Parisien.

This summer's spike in petrol prices has complicated government efforts to control consumer inflation, with ministers urging the food and fuel businesses to reduce their margins.

TotalEnergies has extended the year-end fuel price cap, and several supermarket chains have run specials to offer petrol at cost.

However, Borne claimed that wholesalers were unable to lower prices any more due to a 1963 prohibition on selling fuel below cost, albeit the ban would be abolished for "several months."

"With this unprecedented measure, we will obtain tangible results for the French people, without subsidising fuel," Reuters quoted her as saying in an interview published on Saturday.

She dismissed the notion of the government lowering fuel taxes, pointing out the need to lower the public deficit and debt while arguing that big businesses should contribute as well.

The government may need to take action to address the issue of large profit margins in the petroleum refining industry, according to Finance Minister Bruno Le Maire on Thursday.

Regarding food costs, Borne informed Le Parisien that beginning in November; businesses must make a note on labels whenever they change a product's size.

During the recent price surge in the food industry, so-called "shrinkflation," in which products are supplied in lower quantities without any price drop, has come under fire.

This month, the French retail operator Carrefour made the announcement that it will put notices next to any products that it discovered to be engaged in such practices.

(With inputs from Reuters)

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