Having stopped in the first quarter, like other countries in the euro zone, the French economy should restart at very slow speed in the spring. According to the economic report published by INSEE on Thursday March 14, this will result in zero growth over the first three months of the year and low activity, of 0.3%, in the second quarter. Inflation continues its slow decline: from 6.3% in February 2023, it fell to 2.9% in February 2024, and is not expected to exceed 2.6% at mid-year. “Disinflation is confirmed”, assures Dorian Roucher, head of the economic department.
The end of the inflationary crisis could fuel households’ desire to consume, thanks to a slight increase in purchasing power, of around 0.8%, according to INSEE. On the one hand, because, after two years of hindsight, “real wages would increase modestly at the start of 2024”. On the other hand, due to the revaluation of retirement pensions and social benefits, without forgetting “the dynamism of property income”. Hence a change in the economy, which has mainly been driven since the health crisis by business spending: “The restart will be achieved more through consumption, while investment remains depressed”, says Mr. Roucher.
Food consumption, in particular, which has declined over the last two years, “would timidly begin to climb back up the slope”, according to INSEE, as well as expenses linked to accommodation and catering. This shift is accompanied by a change in the appearance of inflation: it now affects services more, which pass on the increase in wage costs in their prices, while the prices of food products and manufactured goods will be more stable. than over the last two years. Food inflation, which drove the increase in overall prices between September 2022 and September 2023, could even fall to 1.2% in June, the lowest figure observed since January 2022.
“Employment is growing less quickly than the active population”
But make no mistake: this recovery in consumption will remain moderate. It is estimated at 0.3%, while in December 2023 forecasters were still counting on 0.6% additional spending. In a context of major uncertainties, particularly on the geopolitical level, household confidence remains fragile. This is evidenced by the savings rate, which will remain at around 18% of income, two or three points above the 2019 level. Likewise, household investment, which mainly covers real estate acquisitions, will continue to decline. , at least over the first half of the year.
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