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In Portugal, supermarket margins in the sights of the government


Tired of seeing food prices soar, the Portuguese government threw a stone into the pond, at the beginning of March, by denouncing the responsibility of the distribution chains. “We respect commercial operators, but also and very much the rights of consumers”thundered the Minister of Economy, Antonio Costa Silva, after announcing a strengthening of inspections in supermarkets, aimed at ensuring the legality of price increases.

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In question: the very high gross margins detected by the Authority for Food and Economic Security (ASAE), dependent on the Ministry of Agriculture, which reach nearly 50% on onions and oranges, and more than 40% on pork chops or eggs.

Thirty-eight brigades, made up of eighty ASAE inspectors, have been tasked with stepping up their controls. Already in 2022 the organization had opened fifty-one procedures for “speculation”. Even if the gross margins do not include transport and distribution costs, they are considered excessive by the government, which does not rule out the possibility of limiting them. Some parties have again called for a return to the 1984 law, which set a limit of 15% net profit margin.

“Do not look for false culprits”

While he managed to control electricity prices thanks to the“Iberian exception”, which has made it possible to decouple them from those of gas, the government has seen the price of the average household basket jump from 74.90 euros to 96.44 euros in one year. That’s about a 29% increase. Almost four times more than the general inflation rate (7.8% in 2022).

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The Portuguese Association of Distribution Companies did not appreciate the executive’s accusations and recalled the increases in production, transport and labor costs that affect the entire chain. “The retail sector does not make any unfair profits”defended himself, Thursday, March 16, the financial director of the Sonae group, owner of the Continent supermarkets, while calling for “not looking for false culprits”.

However, the country’s largest retail chain has pledged to “avoid passing on all additional costs to consumers” in the future, acknowledging having noted a drop in consumption linked to inflation “very tough for families”.