Posted Jul 29, 2022, 9:20 AMUpdated on Jul 29, 2022 at 2:01 PM
No respite for inflation, but grounds for hope for the future. In July, consumer prices soared 6.1% over one year, after rising 5.8% in June, according to the provisional estimate published on Friday by INSEE. Unheard of since the mid-1980s.
Inflation spreads throughout the economy. It is increasingly affecting services, the prices of which rose by 3.9% over one year, manufactured goods (+2.9%) and food products. Over one year, the latter now record a price increase of 6.7%, which is more than general inflation.
Still up nearly 29%, energy prices are nonetheless slowing down, reflecting the recent drop in oil prices. Over one month, consumer prices increased by only 0.3% against +0.7% in June, also calmed down by the discounts offered during the sales. A harbinger of a possible lull.
The positive impact of the 30 cent rebate
Today, economists also think that the rise in prices in France will stop accelerating. “The law on purchasing power and the probable easing of oil prices given the international situation should allow France to avoid an inflation peak of 7% in September”, assures Ana Boata, director of economic research at Allianz Trade.
While the “tariff shield” on energy prices, as well as the rebate at the pump, already allow France to have lower inflation than the other countries of the euro zone, the reinforcement of the rebate at the pump of 18 cents to 30 cents in September could also have a noticeable effect.
“If this measure materializes, it could lower the level of inflation by a few tenths of a point”, calculates Julien Pouget, chief economist of INSEE. “The impact of the 18-cent discount had been assessed at 0.4 points less on the overall annual shift in prices, in April and May,” he recalls.
The deterioration of the international situation – contraction of American activity, slowdown in China and Germany – should also help to calm prices. “Oil prices have calmed down a bit, and could possibly continue to fall, against a backdrop of fairly uncertain global economic prospects”, confirms the INSEE economist, also pointing to “an already perceptible relaxation in the prices of wheat and certain raw materials. And “the business tendency surveys show a slowdown in expectations of price increases in industry,” he adds.
Will this be enough to kick-start household consumption, which has been sluggish since the start of the year? In any case, this is the scenario of some experts. “If inflation subsides, households should start spending again in the coming months. And all the more so as the new devices being examined in Parliament will support purchasing power,” notes Stéphane Colliac at BNP-Paribas. Bercy expects a 0.5 point gain in household purchasing power this year. “However, household consumption should not return to its pre-crisis level until mid-2023,” warns Stéphane Colliac. Certain prices should, it is true, continue to rise: at the end of the year, the increase in food products could thus reach 8.5% over one year, according to the expert.