2024-03-31 10:00:21
The slowdown in inflation: a marked trend
In March, inflation took a step forward in France, standing at 2.3% on an annual basis, following reaching 3% in February. This slowdown is mainly attributed to the significant drop in prices in several key sectors. In particular, INSEE points to a notable slowdown in food prices, which only increased by 1.7% in March, compared to 3.6% the previous month. This downward trend also concerns other areas such as services, energy, and manufactured products.. Tobacco prices also saw their growth slow, with an increase of 10.7% year-on-year in March, following an increase of 18.7% in February.
This decrease in inflation is attributed to several factors. For energy, INSEE notes a slight drop in prices, in particular those of gas and petroleum products. On the food side, the decline is undoubtedly the result of more moderate pricing policies, as well as changes in production costs. For manufactured products, despite an acceleration over one month due to the seasonal increase in clothing prices following the winter sales, the general trend over one year remains moderate.
Household consumption: between stability and adjustments
Alongside the evolution of inflation, French household consumption remained stable in February compared to January. INSEE indicates that this stability results from a balance between a drop in energy consumption (-2.7%) and an increase in food consumption (+0.8%) as well as manufactured goods (+0 .5%).
This period was also marked by significant arbitrage by households. While food consumption continued to increase, reflecting a prioritization of essential spending, other expenditure items saw their share reduce. Spending on clothing and textiles fell slightly, as did consumption of “other manufactured goods”, affected in particular by a reduction in purchases of DIY goods and perfumes.
Through its observations, INSEE highlights a generalized slowdown, extending from food to energy, directly impacting household consumption decisions. This trend, closely followed by investors, might have important implications for the future directions of monetary policy, particularly with regard to interest rates.
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