Some good news. The extent of the recovery of the French economy in the second quarter was revised up by 0.2 point, the growth of the gross domestic product (GDP) of France finally settling at 1.1% over the period April June , according to data released Tuesday by INSEE.
This rebound, which follows the stability of the French economy over the first three months of the year, allows the GDP to approach the level which was its before the health crisis linked to the Covid-19 pandemic. It is now 3.2% lower than in the fourth quarter of 2019 (compared to 4.3% in the two previous quarters).
This upward revision has not affected the growth overhang for the year as a whole – namely the evolution of GDP if activity stagnates completely over the next two quarters – which remains at 4, 8%. In fact, the government is still counting for the moment on 6% growth in 2021 and expects economic activity to return to its pre-crisis level at the end of the year.
Acceleration of inflation
At the same time, in this economic recovery, inflation accelerated markedly in France in August to reach 1.9% over one year after 1.2% the previous month, according to the first estimate of the National Institute of Statistics and economic studies (Insee).
“This rise in inflation would result in particular from the rebound in the prices of manufactured products in connection with the end of the summer sales”, underlines INSEE in its report. In addition, “food and energy prices would accelerate. The prices of services would increase slightly in line with those of transport. The rise in tobacco prices would continue, over one year, at the same rate as the previous month, ”added the institute.
Consumption down in July
This price increase could however be a brake on the recovery by weighing down consumption, which remains an essential lever. Household consumption expenditure in France fell 2.2% in July compared to June, pointed out the National Institute for Statistics and Economic Studies (Insee). “This drop is due to the decline in purchases of manufactured goods (-2.7%) as well as the sharp decline in food consumption (-2.9%),” said INSEE. “Energy expenditure, for its part, increased moderately (+ 1%),” said the institute.
In June, household consumption expenditure in France had increased by 0.3% compared to May, a month marked by a very strong rebound linked to the reopening of many shops after the containment in April.