2023-06-15 18:07:56
Sluggish growth. The French economy is expected to grow by 0.6% in 2023, marking a sharp slowdown compared to the 2.5% rise of the previous year, penalized by prices which will remain high despite the expected ebb in inflation, Insee said on Thursday.
The rise in consumer prices, which weighs on households, should slow to 5% on annual average, against 5.2% in 2022, specified the National Institute of Statistics when presenting for the first time its annual forecasts. In December, inflation should stand at 4.4% over one year, against 6% in January 2023.
Prices will continue to rise
But slowing inflation does not imply lower prices. These will continue to rise, contributing to the slowdown in activity since inflation is putting a strain on household consumption. This should therefore fall by 0.2% in 2023 (after +2.1% in 2022), whereas it usually helps to keep the French economy running. It should dip in the spring, especially in food, where prices are experiencing double-digit surges, before rebounding slightly thanks to the slowdown in prices.
This is the first time since 2012 that household consumption has gone into negative territory, with the exception of the year of the pandemic in 2020. Another weak link in growth: household investments, in real estate in particular, as those of companies would mark time, under the effect of high interest rates after the muscular monetary tightening carried out by the European Central Bank (ECB) to curb inflation. Foreign trade, thanks to exports, would support growth.
The rise in consumer prices, which directly affects households in their portfolios, should continue the decline that began in the spring to stand at 4.4% in December over one year. It had slowed to 5.1% in May after 6% in January. It would benefit from a strong lull in energy prices which had soared after the outbreak of the war in Ukraine. Above all, the rise in food prices should slow down markedly thanks to the decline in the prices of agricultural raw materials and energy. After +14.3% over one year in May, inflation should thus be almost halved in December (+7.4%).
INSEE stresses that the evolution of food prices will however also depend on the result of trade renegotiations between distributors and the food industry, reopened under pressure from the government, which wants to see labels drop in supermarkets. Another factor likely to influence their development: the margin rate of companies in the sector, which has increased sharply after suffering during the health crisis.
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