2023-04-28 16:13:31
Posted Apr 28, 2023, 10:44 AMUpdated on Apr 28, 2023, 4:13 PM
This is always bad news for consumers and businesses. Inflation has indeed rebounded in April, according to the first estimate published this Friday by INSEE. It now reaches 5.9% over one year in France.
Small consolation, if it is indeed more than the 5.7% of March, for the time being it remains lower than the peak reached in February. At the time, the inflation rate peaked at 6.3%.
Food prices are calming down
Should we be worried about this jump in inflation at an annual rate, when INSEE claims that inflation should return to 5% next June? And that economic activity is progressing, at the start of the year, at low speed (GDP having increased by 0.2% in the first quarter, according to INSEE).
If an acceleration in prices undeniably has an effect on the purchasing power of households and their confidence, on the other hand the rise is undoubtedly less worrying than it seems. First of all, it is essentially due to a rebound in the prices of energy and those of services which are due to what statisticians call effects
basic. Clearly, one year apart, the April 2022 energy price which serves as a reference was low.
Then, the rise in food prices, which had led INSEE to revise upwards its first estimate for March, turned out to be less rapid. While their annual increase remains high (14.9% over one year), it is down from the previous month. A drop in speed attributable above all to a fall in the prices of fresh produce, the increase of which was more than 17% in March, is now only 10.2%. While the prices of manufactured products are also experiencing a slight slowdown.
Finally, the last encouraging sign, the rise in prices, calculated on a monthly basis, is less strong from one month to the next: +0.6% in April after +0.9% in March.
Consumption still struggling
But if they go in the right direction, all these signals are however for the moment too weak to give back the taste to consume to the households, as indicated implicitly the last economic survey on the morale of the households. Their consumer spending thus accentuated their decline in March, again according to INSEE: they fell by 1.3% after -0.8% a month earlier. A decrease linked above all to the sharp decline in purchases of food products.
But not only since spending on durable goods has also fallen sharply, the French being in particular less inclined to buy “new and used cars as well as motorhomes”, according to INSEE.
Over the first quarter as a whole, consumption of goods fell by 0.2% compared to the fourth quarter of 2022. Purchases of food products fell more sharply (-2.3%), with energy consumption falling conversely, an increase of almost 4% (+3.7%) from one quarter to the next.
IMF calls on European central banks to ‘kill the beast’ without ‘break’
At a time when inflation seems to be taking a break on both sides of the Atlantic, the IMF is once again calling for us not to let our guard down.
“We have to go and kill this beast. If potentially you start taking a break, throwing a party prematurely, history is full of examples where you need a second try to rein in inflation and you do damage to the economy a second time,” launched this Friday Alfred Kammer, the director of the IMF for Europe.
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