Orange with Media Services, published on Sunday, June 12, 2022 at 07:00
To cope with inflation, some households are faced with daily trade-offs in an attempt to balance their budget, with spending inevitably jumping.
in May, inflation has accelerated furtherexceeding the 5% mark for the first time since 1985 and, “unlike the 1970s and 1980s, many consumers are not used to this phenomenon”, notes Jérémy Ducros, economist for the general interest association La finance for everyone.
Another specificity according to him: “We don’t know how long it will last” and “there is great heterogeneity, for example between the prices of energy which are exploding and those of food which are increasing, but less quickly” .
To cope with inflation, some households are faced with daily trade-offs in an attempt to balance their budget, with spending inevitably jumping.
Less pleasure shopping for the middle classes
For the middle classes, whose share of the budget dedicated to constrained expenses (food, rent, energy, daily journeys, etc.) is lower than for the most precarious, the first arbitrations are made on non-essential poles. “There is a greater decrease in hygiene / beauty, hairdresser and beautician type, and we finish the tube of toothpaste”, observes Sandra Hoibian, director general of the Research Center for the study and observation of the conditions of life (Credoc).
Travel related to leisure, holidays, restaurant, furnishings: in the face of uncertainty, “we cut the purchase of pleasure and, in households which had already saved during the health crisis (of Covid), we strengthen precautionary savings “, she adds.
If consumers are no longer used to periods of inflation, confinements due to Covid have established new habits, which result in maintenance at low levels of expenditure on clothing/hygiene/beauty or cultural outings.
And, new in the face of inflation, some digital subscriptions taken during the crisis could be terminated.
Netflix cites inflation as one of the factors that impacted its subscriptions in the first quarter. According to a recent study by the Nielsen Institute, 44% of French households who now pay attention to their expenses have limited their “leisure at home” budget.
Distributor brands and first prizes acclaimed, organic abandoned
First reflex to have when budgets are weighed down by inflation according to La finance pour tous, “take out three account statements” and hunt for duplicates, for example in insurance, to sort out.
But on essential expenses, giving up is impossible, especially for the most precarious who must find alternatives. On food goods (consumption down 1.1% in April according to INSEE), the switch to distributor brands or even first prices is a reflex25% of vulnerable households currently use them, although their prices increase proportionally more, according to the Nielsen Institute.
Postponement is all the easier today as discount distributors such as Lidl or Aldi have improved their image: “they communicate on the quality of fresh products, they have renovated their stores, launched loyalty schemes and remain attractive with promotional programs on household appliances”, according to Nicolas Léger, analytical director at Nielsen.
More recent phenomenon, the abandonment of organic (sales down 6.3% since the beginning of the year) whose price has, according to him, always been a “barrier” to consumption, reinforced in an inflationary context.
Being green doesn’t always reduce energy bills
On energy, whose consumption rebounded in April because of the temperatures, the room for maneuver is limited. On a national scale, lowering the heating by a few degrees reduces the bill but, on a household scale, the price increase quickly compensates for the savings made.
“Certain ecological gestures which also reduce costs are not accessible to everyone”, notes Jérémy Ducros, despite the subsidies to change the means of boiler or car. Ditto for fuel: “We can slow down but we will always have to refuel”.
On these last budget items, the government is setting up targeted aid (inflation compensation, tariff shield, reduction at the pump), but “the elephant that will arrive in the room” without room for maneuver, according to Sandra Hoibian, it is housing, “which has been increasing for 20 years and will not escape inflation in the coming months”.