In March, French supermarkets pledged to keep prices for a range of groceries “as low as possible” until June, i.e. not to raise them. Finance Minister Brunner can get a lot out of the model. “I find that interesting, and you could, for example, bring that up and discuss it at the food summit on Monday,” he said in the Ö1 interview series “Im Journal zu Gast”. It is a voluntary solution by grocers that has been worked out with the French government.
The French food solution also came at a time when thousands of people were taking to the streets over controversial pension reforms. In the fight against high inflation, however, the government in Paris insisted on voluntariness. As a result, not all supermarket chains are taking part in the measure. In addition, retailers were able to specify which products were to be labeled with the “anti-inflation” label.
Although the campaign will run until mid-June, the mood between the grocers and Finance Minister Bruno Le Maire is anything but good. A few days ago, the minister announced that he would summon those retailers who are not passing on the now lower wholesale prices to consumers to the ministry. “And if that’s not enough, I will use all the powers at my disposal to ensure the big companies pass on the price drop.”
“watering can” vs “watering can”
For days, a possible reduction in VAT on staple foods has been increasingly aired in this country. Green club boss Sigrid Maurer also emphasized on Friday that Vice Chancellor Werner Kogler had already suggested thinking about a reduction a year ago. The Director of the Economic Research Institute (WIFO), Gabriel Felbermayr, recently brought new impetus to the debate. The economist had called for “open-ended” thinking about measures to reduce inflation – including interventions such as VAT reductions.
However, Brunner stuck to his rejection on Saturday. In other European countries it has been seen that this measure is not or only partially passed on to end consumers. In addition, it is a “classic watering can method” from which people with higher incomes in particular would benefit particularly strongly. “So the question is whether that’s smart.” In the past few months, the opposition had sharply criticized the government for its “watering can policy”.
Brunner also rules out other additional price controls, such as rents. The government has already taken measures such as the electricity cost brake, the reduction in network costs and energy taxes. These would have already contributed to curbing inflation. In addition, there is a fall in prices in some areas, such as energy. One must therefore now question with all measures whether they are still necessary or could even have a price-driving effect and should be phased out.
Criticism from SPÖ and NEOS
Criticism of Brunner’s statements came from SPÖ finance spokesman Kai Jan Krainer. After a year of record inflation, people often could no longer afford their daily groceries and rent, “but Finance Minister Brunner and the government are just looking on and saying they have done enough anyway”.
He once again called for inflation-dampening measures such as rent control and the involvement of the Federal Competition Authority “to curb the excesses of ‘greed inflation’ and the crisis profits of stock corporations”. In view of its “total failure”, the government should clear the way for new elections.
NEOS business spokesman Gerald Loacker, in turn, criticized that the previous “unbridled funding for everyone” had led to far higher inflation than in other countries. “It’s high time the government stopped draining people and then handing out the money with the watering can. Instead, the taxes have to go down.”
Summit Against Inflation
In the fight against high inflation, Brunner and ÖVP Economics Minister Martin Kocher have announced meetings with experts and – if requested by them – the social partners for next week. Social Affairs Minister Johannes Rauch, Vice Chancellor Werner Kogler (both Greens) and Agriculture Minister Norbert Totschnig (ÖVP) have meanwhile invited experts and trade representatives to a “food summit”.
On Saturday, Kogler emphasized in a joint video with Rauch that was published on social networks that food companies had to explain themselves. It is no longer acceptable that “in Austria 10 to 20 percent more is paid for exactly the same product than in Germany,” said Kogler.
