2023-06-30 10:15:00
Inflation continued to decline in June in France, suggesting a lasting lull on the price front, unlike the public debt which for the first time exceeded the symbolic threshold of 3,000 billion euros. This is news that will relieve the wallets of the French a little: prices continued to rise in June, but less rapidly, for the second month in a row. Inflation reached 4.5% over one year, after 5.1% in May and 5.9% in April, dropping for the first time in more than a year below the 5% mark.
While they continued to rise in June (+13.6% year on year), food prices nonetheless slowed down. In energy, they even fell, marking a reversal of trend after their surge in the wake of the post-Covid recovery and then the war in Ukraine. “These are encouraging results,” commented Sylvain Bersinger, chief economist at Asterès, interviewed by AFP, estimating that inflation should continue to decline over the rest of the year. “The fact that inflation is falling and that it will probably continue to fall is rather positive for household consumption”, one of the traditional engines of French growth which is currently idling but which could regain some strength in year-end or early 2024, he added.
In May, household consumption of goods increased by 0.5% compared to April, but remained 3.6% below the level reached a year ago, according to INSEE. This increase over one month is due to higher energy consumption, especially fuel and gas. Food consumption is also up, but only by 0.3% over one month. Over one year, it remains down sharply, by 9.7%, penalized by double-digit price increases.
Not “catastrophic”
The Minister of Economy Bruno Le Maire had promised in early June that hundreds of food products would see their prices drop from July under a commitment made to Bercy by these 75 major agrifood manufacturers, that he had also pushed to reopen trade negotiations with distributors. For Sylvain Bersinger, it is still premature to see in the modest increase in household consumption observed in May the sign of a real recovery, the French still showing themselves to be very cautious in the face of inflation which is eating away at their purchasing power.
No more, according to him, than it is appropriate to be alarmist with regard to the public debt, even if this one swelled in the first quarter, crossing the 3,000 billion euros. The country’s debt, which increased massively with the health crisis and then the energy shock, further increased by 63.4 billion euros to reach 3,013.4 billion in absolute value at the end of March. Relative to GDP, public debt rose to 112.5%, from 111.8% (revised upwards) at the end of December 2022, and 114.8% in the first quarter of 2022.
“Debts were issued this quarter when they could have been issued the quarter before or after,” qualified the economist. “We must not say to ourselves, it’s great consumption is picking up again or it’s catastrophic, the debt is increasing,” he summed up. However, the level of debt remains high and well beyond the European budgetary target of 60% of GDP which, after its suspension during the Covid, will be in place again in 2024.
And this increase in debt falls all the more badly at a time when the government has planned to cut at least ten billion euros in spending over the five-year term, particularly in health, in an attempt to restore public finances. Other savings will be added from the 2024 budget. The executive presented in April a more ambitious trajectory for the restoration of France’s accounts, which plans to reduce the debt to 108.3% of GDP in 2027 and the deficit at 2.7%, in the European nails, against 4.9% expected this year.
After 2.5% in 2022, economic growth should slow to 0.6% this year, according to an INSEE forecast published in mid-June. This is less than the 1% increase anticipated by the government.
1688136785
#Inflation #continues #decline #France #debt #exceeds #billion #euros