Sharp rise in household consumption despite inflation

The end of the third confinement gave a boost to household consumption. In May, it increased by 10.4% compared to April.

“This rebound is mainly driven by purchases of manufactured goods (+ 26%), with the reopening of all stores on May 19, and to a lesser extent by energy expenditure (+ 2.6%) after the end of travel restrictions in early May, ”explains INSEE.

In fact, spending on goods almost returned to their average level in the fourth quarter of 2019 in May, before the onset of the health crisis, specifies INSEE.

In retail, the reopening of shops has particularly benefited clothing / textile purchases which jumped 149.2%, after falling 57% in April. The opening of the sales from this Wednesday could give a further boost to this sector in July.

Tensions on commodity prices

At the same time, purchases of durable goods grew by 11.3%, driven in particular by housing capital goods (+ 24%). For these expenses, the French who had saved during the first confinements were able to draw on reserves which is an encouraging sign to promote economic recovery.

At the same time, this recovery in consumption is taking place in a context of high inflation. On average, the rise in consumer prices reached 1.5% over one year in France in June, against 1.4% in May, according to the provisional estimate published Wednesday by INSEE.

According to INSEE, this increase “would result from a rebound in the prices of manufactured products” because of the tensions on the price of raw materials. Conversely, food prices tend to stagnate or even drop due to the drop in fresh produce (-3.4%). Energy prices, which had fallen sharply in spring 2020, also gained 10.9%, after 11.7% in May.

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