Bad news, the LEP rate has reached a ceiling and will soon drop
Inflation, according to INSEE, reached a ceiling in February and will begin to decline. A relief for the purses, but bad news for LEP holders, whose rate should drop in August.
Perhaps you are one of the 18 million or so French people who received an e-mail from the tax authorities at the end of last week announcing their eligibility for the Livret d’epargne populaire? Twice a year, the Minister of Economy and Finance has in fact got into the habit of promote this awesome rulebook, paid 6.1% since February 1 and accessible to low-income tax households. For a simple reason: he is the only one, currently, effectively protect your money from inflation.
LEP 6.10%: are you entitled to this super rules booklet?
If this is your case, you do not already have one and you want to maximize your income, do not wait too long to go to your bank. The remuneration of LEP, in fact, has high chance of going down in 6 monthsnext August 1st.
A ceiling reached for inflation… and for LEP
For what? Because the LEP rate formula is designed to align with the consumer price index. More precisely on the average of this index over the semester. However, and this is good news, the price rise will slow, especially those of energy. In its note on the economy unveiled on Tuesday, Insee (1) announces, in fact, inflation a little above 5% in the first half of 2023compared to 6.1% in the second half of 2022.
If we look more closely at the month-by-month forecasts, average inflation for the first six months of the year should flirt with 5.5%. Logically, the LEP rate should match this 5.5% at the next chance for review, next August 1st. Unless the Banque de France decides otherwise: it has the power, but there is little chance, this time, that it will use it.
Obviously, this is not good news from the saver’s point of view. But there is a matter of consolation. First, because inflation seems to have reached a ceiling and the cost of living will therefore begin to fall from March. Then because the LEP will remain an excellent business, when compared to other savings accounts. Over the whole year, it should bring in an average of 5.7% net of taxes. Either, all the same, nearly 440 euros in interest for a LEP credit of 7700 euros, its payment ceiling.
(1) National Institute of Statistics and Economic Studies