Rising electricity prices will have a relatively limited impact on inflation

2023-07-31 14:45:07

Posted Jul 31, 2023, 2:45 PM

This Tuesday, August 1, regulated electricity prices will increase by 10%. This measure will concern both households and very small businesses (TPE) or craftsmen whose consumption is less than 36 kVA. The blow is likely to be all the more severe as on February 1, they had already had to collect a 15% increase. The impact on the inflation rate in France should nevertheless be relatively limited. It would be around 0.2 points in August, according to INSEE calculations.

Bercy has announced its intention to phase out the electricity shield by the end of 2024, with a gradual return to market prices. The gas price shield was stopped on July 1, with no effect on the price index given the fall in market prices.

Less favorable comparisons

Energy (gas, oil, electricity) weighs 8.6% in the consumer price index calculated by INSEE. While prices have plunged in recent months, prices appear down 3.8% in July compared to the previous year.

It is among other things thanks to this sharp decline in energy that inflation in France is decelerating: it fell from 5.1% in May to 4.5% in June and then to 4.3% in July. From month to month, it could experience “Rocky developments”, “Due to strong upward or downward movements in energy prices in the second half of 2022”, warned the Institute of Statistics in its note. June economic situation.

Thanks to state subsidization of energy prices via a series of measures (shields, rebates at the pump, etc.), inflation in France was one of the lowest in the euro zone in 2022 and households were protected, the mechanisms deployed masking the real increase in tariffs. The comparison effects should be less favorable in France than in other countries this year as protections decrease.

In France, inflation in the coming months will also depend on food prices. For the fourth consecutive month, prices slowed in July contributing to the lull. On supermarket shelves, labels still posted a jump of 12.6% in July over one year, after 13.7% in June. “The manufacturers must agree to negotiate”, hammered again this Monday on BFM Business Jacques Creyssel general delegate of the Federation of commerce and distribution.

Services – 50% of the price index – are maintaining their momentum of past months, an increase of 3% over one year.