Which French people will suffer the most from the rise in the cost of living in 2022? The French Observatory of Economic Conditions and France Strategy, an organization attached to Matignon, have looked into the question, and deliver converging conclusions in two notes published on Wednesday February 22: the effect of inflation on the standard of living is strongly correlated with age – the repercussions were stronger for the oldest – and with place of residence.
“Certainly, inflation, which primarily affects energy and food, weighs more on the standard of living of the poorest, whose entire income is consumed, than on that of the wealthiest, who save regarding a third of their incomeexplains Mathieu Plane, deputy director at the OFCE and co-author of this work, alongside Pierre Madec and Raul Sampognaro. “But to determine the impact of rising prices on the standard of living, the income criterion is not sufficient”. The consequences of inflation also depend on age, lifestyle, the size of the dwelling and its heating method, as well as the use made of the automobile.
Thus, seniors and people whose homes are far from major urban centers are more affected by the rise in prices than other types of households. “A household whose reference person is over 65 has an inflation rate 0.6 points higher than average inflation” which is 5.2% in 2022, according to INSEE, concludes the OFCE. The explanation lies in the housing conditions of seniors: “They more often live in larger houses or apartments, which leads to higher energy consumption”, says Plane. They are also inclined to live further from city centers, and sometimes in older and therefore more energy-intensive housing. “Conversely, those under 30, with smaller dwellings, and more often located in urban areas”, are less affected by inflation. As for the price increase suffered by a household in a rural area, it is “higher by 1 point than the average, while it is lower by 0.8 point in the Paris area”.
Great heterogeneity
Thus, beyond the differences in income, we observe great heterogeneity in the shock that inflation imposes on households. According to OFCE calculations, while prices have increased by an average of 5.2% in 2022 – the highest figure since 1985 – one in ten households is actually suffering a shock of more than 8.5%, and a out of ten have to take “only” a 3.5% increase in the cost of living. In both cases, the Office also recalls, this shock would be almost twice as high without the “tariff shield” measures put in place by the government in 2022. But the question that arises from this observation is complex: how better adjust the measures to support purchasing power, when the aid comes to an end? “ The fact that inflation is experienced in very different ways for households with comparable incomes makes it very difficult to target aid “, underline the experts of the OFCE. “We will have to cross the income criterion with other criteria”. At the risk of creating a gas factory.
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