Will the French portfolio soon be able to breathe a little? Presented as a priority by the government, the purchasing power of households has been suffering for several months, eroded durably by inflation. And, according to experts, this trend could continue for a while. This Friday, INSEE unveiled its first estimate of the evolution of the consumer price index in April: according to national statisticians, the inflation rate over one year reached, this month, 5, 9%.
In detail, the evolution differs according to the categories of products and services concerned. The cost of energy products (gas, electricity, oil) thus increased by 7% between April 2022 and April 2023, after a more moderate increase of 4.9% over one year in March. The acceleration of inflation is less marked with regard to tobacco (9.4% over one year after 7.8%) and services (3.2% after 2.9%). The rise in the price of food products, on the other hand, was less rapid than in March, since their prices rose by 14.9% over one year after having reached 16% the previous month, details the National Institute of Statistics and economic studies. Food inflation has become the main driver of inflation in 2023, supplanting energy.
The slowdown in the rise in food prices in April mainly concerns fresh produce, the cost of which increased by 10.2% over one year, after having jumped by more than 17% in March. Other food products rose by 15.8% over one year, a rate almost identical to that of the previous month (15.7%). Finally, the price of manufactured products rose by 4.7% over one year, a very slight slowdown compared to March (4.8%). Other good news, “over one month, consumer prices are expected to increase by 0.6% in April 2023, after 0.9% in March,” says INSEE.
How long will inflation stay above the 5% mark? In its latest forecasts, the government is counting on a rate established at 4.9% in 2023, and 2.6% in 2024. Too optimistic estimates, according to the High Council of Public Finances: “Food product prices should continue to rise increase under the effect of the transmission of past increases in production costs and […] the prices of services will remain supported by the strong increase in wages, linked to recruitment difficulties and the compensation for high inflation”, wrote the experts. The executive’s predictions are “a little underestimated, as has been the case regularly over the past two years,” they summed up.
By way of comparison, the Banque de France expects an annual average rate of 4.9% in 2023, compared to 5.5% for the Rexecode institute and 5.8% for the OFCE. For their part, the national statisticians remain cautious: in their last note on the economy, dated mid-March, they argued that “inflation would come back somewhat, to stand a little below 5.5% in June “. The decline would focus mainly on energy prices, while food prices “would remain particularly dynamic, despite the fall in world prices of food commodities”. The prices of services like those of manufactured products should also increase, until June.
Explosive, this file is closely followed by the executive as well as the opposition. “Today, the first concern of our compatriots is purchasing power,” said Elisabeth Borne, presenting her roadmap for the months to come. Recognizing the difficulties encountered by many French people, the Prime Minister called on distributors and manufacturers to renegotiate, also inviting employers and unions to “act to raise wages”. An entire program.
