Retailer Leclerc warns inflation could hit spending

PARIS Mon Nov 8, 2010 7:15am EST

PARIS Nov 8 (Reuters) - The head of French retailer Les Centres E. Leclerc warned about the risks of inflation, even as he pledged to stick to a low-price policy that helped the group expand its market share by half a percent in September.

"The most worrying element is that price inflation threatens consumer spending," said CEO Michel-Edouard Leclerc in an interview with daily newspaper Le Monde published on Monday afternoon.

Blaming higher commodity prices, he said some brands were asking retailers for price hikes of between 5 percent and 19 percent, proposals he called "outrageous".

"We have told our buyers to obtain prices hikes for 2011 for the Leclerc centres that will be below the level of inflation nationally," he said.

French retailers and their suppliers are holding talks over price policy for 2011 that are expected to be settled by February.

Leclerc heads Les Centres E. Leclerc, a cooperative association of about 600 retailers, which competes against Carrefour (CARR.PA) and Casino (CASP.PA).

Carrefour and Casino saw their French hypermarket sales decline last year, but Leclerc's rose 5.6 percent, excluding petrol, to 27.2 billion euros ($37.8 billion). It also increased its market share in hypermarkets by 0.6 percentage points to 17 percent, making it the market leader. (Reporting by Dominique Vidalon; Editing by David Holmes) ($1=.7189 Euro)

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