Inflation stabilizes, but begins to weigh on household consumption

Often under duress, the French began to cut their spending. In October, household consumption fell sharply by 2.8%, the largest monthly drop since April 2021, during the third confinement, according to data published on Wednesday November 30 by INSEE. The first drop in consumption is that of energy: the weather and the repeated incitements to sobriety have a fairly clear impact in the published data. Energy expenditure fell by 7.9% in October alone.

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A decrease “expected”according to Julien Pouget, head of the business cycle department at INSEE, “because of the mild weather which may have encouraged less heating of the accommodation”. But no doubt also by the efforts of households, which limit car travel and monitor the thermostat in their homes. If inflation shows signs of stabilization, it remains on a high plateau.

Prices are indeed up 6.2% in November year on year, a figure unchanged from the previous month, according to provisional estimates. In November alone, they rose by 0.4%, against 1% in October. It is therefore not surprising that households are more hesitant in their consumption.

Support measures

They restricted themselves in the fall to purchases of manufactured goods (−1.7%). In anticipation, no doubt, of sales and promotions, shopping was not in season, and shopping for textiles and shoes posted a drop of 4.1%. We are also saving at the supermarket: purchases are down for the fifth consecutive month, down 1.4%.

Since October 2021, over one year, the household food cart – the volume of sales – fell by 7.5%. A need that can be explained by soaring prices, since it is food prices, the locomotive of inflation since September, which continue to lead the dance: in November, labels in markets and supermarkets increased by 12.2% over one year – and even 12.5% ​​for fresh products.

Admittedly, energy prices have increased by 18.5% over one year, but the decline has begun: they were up by 21.6% in October 2021. To shed light on these consumption trends, INSEE has dissected the evolution of household purchasing power since the beginning of the year. The inflation shock, which started in autumn 2021, led to a sharp decline in purchasing power (−1.8%) per capita in the first quarter of 2022.

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