2023-11-03 13:30:47
Take courage, the incessant rise in prices for months is almost over, according to Bruno Le Maire. “We are emerging from the inflationary crisis,” declared the Minister of the Economy following the “good” – everything is relative – results in October. “Only” 4% inflation compared to a year ago, after 4.9% in September, that’s worth celebrating, right?
Well, as a reminder, the same minister spoke of “temporary” inflation in November 2021. Then a decline “from the end of 2022” on February 8 of that year. But still a “peak” in June 2022. “A drop in inflation” in August. He said “we will emerge from inflation in mid-2023” in February 2023. And that prices “would start to fall” in May 2023. So be careful not to sell the skin of the bear (at a high price)… To be clear to convince, it is enough to note that inflation continues to hurt very badly. The proof in four graphs.
Be careful, a drop in inflation can quickly hide a rise
A decline in inflation is nothing new. In two years, the latter has already fallen seven times (August, September, December 2022; March, May, June, July and therefore October 2023). The fall was never definitive for the moment, because it was followed by a sometimes spectacular rise, whether from the following month or after a longer period of calm (maximum three months).
So of course, in October 2023 this is the lowest rate since February 2022. However, inflation is calculated by comparing current prices to those of twelve months ago. Inflation for October 2023 is therefore measured in relation to October 2022, where inflation was already very high (6.2%). It is therefore normal for inflation to drop, since it is now compared to very high prices.
Such a phenomenon was notably observed in Spain, where after a year 2022 with inflation above 10%, it “naturally” collapsed by simple mathematical logic, without it changing anything for the costs. Finally, remember that economically “healthy” inflation is estimated at around 2%. An objective that the government is aiming for in 2024. There is still quite a way to go.
Falling inflation, not prices
Inflation falling remains inflation, and therefore rising prices. The most optimistic will say that they increase more slowly, the others will still find them particularly high when going through the checkout. The consumer specialist firm NielsenIQ has taken the average price of several key products from our shopping every month since November 2022. To simplify, we have selected three food products: pasta, olive oil and frozen steaks.
Compared to November 2021, which corresponds to the peak of inflation in France (second month in a row at 6.2%), the prices of these three products have… increased again. + 4.8% for olive oil, + 7.3% for minced steaks, and + 2.3% for the package of pasta. A significant drop in prices – a once-hoped-for scenario – is now excluded from most economic forecasts.
Salaries that do not keep up
Prices are increasing, wages too… but much more slowly. The bulk of the decline, when the incomes of the French were completely dropped in relation to the price, in spring-summer 2022, seems to be behind us. Phew! According to INSEE forecasts, all salaries should almost catch up with inflation by the end of the year. But in the second quarter of 2023 – latest data up to date – executives are still experiencing a loss of purchasing power, as are intermediate functions.
Increasingly reduced shopping
Wages are falling, prices are still rising, and inflation has a nasty habit of rebounding. Faced with this, how do the French manage to get by financially? No choice, they simply buy less, even for essential needs like food.
To calculate this, INSEE compares French purchases with prices twelve months ago. Concretely, since December 2021, the volume of food consumed by the French has continued to decline: – 3.27% on average, and almost – 8% in April 2023. A phenomenon not observed for more than fifty years.
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