2023-12-04 16:52:56
Will the French economy be able to breathe a little with the confirmed slowdown in inflation? Perhaps, but not yet the households who remain penalized by still restricted purchasing power.
Prices continued to fall slightly in November. The expected slowdown in inflation is there. As of December 1, France is now at 3.8% inflation (harmonized European data) and 3.4% according to Insee standards, over one year, compared to 4% last October. Above all, we are far from the peak of 7.1% recorded last year, when the world was still dealing with the Covid-19 pandemic. “This drop in inflation would be due to the slowdown over one year in the prices of services, energy and, to a lesser extent, manufactured products and food”explained the National Institute of Statistics and Economic Studies (Insee) on November 30.
The energy crisis has further complicated the post-Covid crisis
Economist Stéphanie Villers explains that things could have been corrected sooner without the war in Ukraine: “The first trigger (of inflation) was the end of the Covid crisis, the factories were put (again) in working order, consumers also returned to retail stores and so that put pressure on supply, which induced an increase in prices which was supposed to be temporary, but with the arrival of the energy crisis in February 2022 with the outbreak of the war in Ukraine…”she argued, Saturday December 2, on Franceinfo.
The essential thing is the present, Bruno Le Maire seems to say, for his part, who is pleased to have “ managed to control inflation in two years », believing that completing the year “below 4% inflation […] is a real economic achievement, which is due to the economic policies of the Eurozone States.” But while inflation is falling, purchasing power is not increasing. The consumer is, in fact, far from benefiting from this slowdown in price increases. Opinions are almost skeptical despite the announced increase in the minimum wage which would increase to 1,406 euros on January 1, 2024 for more than 3 million people..
Towards a sharp fall in prices
Marc Touati, economist and president of the ACDEFI firm, warns on this subject in a column on Capital: “This downward movement in inflation is far from being excellent news. In fact, it quite simply corresponds to one of the consequences of the return of recession. Economic history is there to remind us that all phases of high inflation always end with a fall in consumption, then with a recession, which ends up lowering prices: for lack of combatants (that is, that is, consumers), the fight ceased and prices ended up falling…”.
Moreover, he further points out, “despite a slight corrective increase, the INSEE index of household purchasing prospects remained at low levels in November”. For the president of ACDEFI, a way out of the abyss remains far from being found as long as credits are more expensive. Because as long as rates remain rising, “ investment by businesses and households, but also consumption will fall further, fueling the recession and the “infernal machine” will continue… The only relative good news is that this recession will cause a phase of sharp drop in prices”.
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