Posted on Jul 29, 2022 at 9:20 amUpdated on July 29, 2022 at 2:01 p.m
No respite for inflation, but reason for hope for the future. According to the preliminary estimate released by INSEE on Friday, consumer prices rose 6.1% over a year in July after rising 5.8% in June. Unheard since the mid-1980s.
Inflation spreads throughout the economy. It is increasingly affecting services, the prices of which have risen by 3.9% in one year, industrial goods (+2.9%) and food. The latter are now registering a price increase of 6.7% over the year, which is more than general inflation.
Energy prices are still up nearly 29% but are slowing, reflecting the recent fall in oil prices. Over the month, consumer prices rose just 0.3% versus +0.7% in June, also reassured by discounts offered during the sale. A harbinger of a possible lull.
The positive effect of the 30 cent discount
Today, economists are also assuming that price increases in France will no longer accelerate. “The Purchasing Power Law and the likely drop in 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 protection” on energy prices and the petrol station rebate already enable France to have lower inflation than the other countries in the euro zone, the tightening of the petrol station rebate from 18 cents to 30 cents comes into play. September could also have an impact.
“If this measure occurs, it could lower the inflation level by a few tenths of a point,” calculates Julien Pouget, chief economist at INSEE. “The impact of the 18-cent rebate was rated 0.4 points down on the overall annual price shift in April and May,” he recalls.
The deterioration in the international situation – contraction in American activity, slowdown in China and Germany – should also help calm prices. “Oil prices have calmed down a bit and could possibly fall further against the background of rather uncertain global economic prospects,” confirms the INSEE economist and also refers to “a noticeable relaxation in the prices for wheat and certain raw materials. And “business surveys show a slowdown in expectations for price increases in industry,” he adds.
Will this be enough to boost household consumption, which has been subdued since the beginning of the year? Anyway, this is the scenario of some experts. “As inflation eases, households should start spending again in the coming months. All the more so as the new devices being examined in Parliament will support purchasing power,” notes BNP-Paribas’ Stéphane Colliac. Bercy expects household purchasing power to increase by 0.5 points this year. “However, household consumption is not likely to return to pre-crisis levels until mid-2023,” warns Stéphane Colliac. Certain prices are likely to continue to rise: according to experts, the increase in food could reach 8.5% over a year at the end of the year.