Inflation remains high in France

2023-09-29 08:47:50

Published on Sep 29, 2023 at 9:45 amUpdated September 29, 2023 at 10:47

Inflation is stabilizing. In September, consumer prices in France increased by 4.9% over one year as in August, according to the provisional estimate from INSEE. Measured by the HICP index, prices increased by 5.6%, compared to 4.3% in Germany where they are slowing down.

In France, the rise in oil prices continues to be felt. Added to this are the effects of the reduction in the tariff shield on electricity. But the good news is that over one month prices are now falling by 0.5%, whereas they were still increasing by 1% in August.

Fall in food prices over one month

Apart from the new shock suffered by energy, the pace of price increases tends to ease. Inflation thus continues to decelerate in the food aisles of supermarkets. On an annual basis, it certainly still reached 9.6% (compared to 11.2% in August). but the slowdown is now well and truly underway. Over one month, food prices even fell “slightly”, according to INSEE.

The increases are also calming down for manufactured products and even against all expectations in services (+2.8%), driven downward by “transport services” and also accommodation services.

Small downside: in August 2023, production prices in French industry increased over one month (+0.7%) for the first time since March.

At the start of the school year, the persistence of inflation remains the major concern of the French. In March, household consumption began to decline again (-0.5% in volume).

The executive is seeking by all means to counter the increase in the prices of fuel and food products in order to relieve their wallets. Faced with soaring fuel prices, the Head of State announced a new check of 100 euros per car per year for the lowest 50% of workers in 2024. After pushing fuel distributors to sell at loss, without success, he now encourages them to sell at “cost price.

The government’s other priority is to stop the rise of labels on the shelves. The bill which must advance commercial negotiations between manufacturers and distributors “to pass on the drops as quickly as possible” in the prices of many raw materials must be examined in the coming days.

In the short term, however, the decline in inflation risks being sluggish. “Inflation was expected to fluctuate between 4% and 4.5% until the end of the year,” estimate Oddo BHF economists in a note published on September 20.