The slowdown in inflation was confirmed in March: according to provisional figures published on Friday March 29 by INSEE, the price increase over twelve months stood at 2.3%, after 3% in February and 3 .1% in January. In March alone, they increased by 0.2% after 0.9% in February.
For the twelfth consecutive month, food prices, the main driver of inflation for more than a year, are declining: those of fresh products are falling (– 3.9%), while inflation is overall food is only 1.7%. Energy, which saw a small jump at the start of 2024, is also slowing down to 3.4%. Manufactured products, whose prices have been falling for nine months, remained almost unchanged in March (+0.1%).
This lull in inflation is reflected in an improvement in household morale. In March, according to INSEE indicators, the perception of a sharp increase eased, and the proportion of people judging that it was appropriate to make major purchases experienced a “clear rebound”. These intentions are starting to be reflected in the figures: food consumption increased by 0.8% in March, that of goods by 0.5%. The drop in energy consumption (–2.7%) explains that in the end, overall consumption remains flat (+0.0%). But these signals encourage INSEE’s scenario of a resumption of activity driven by consumption in 2024. In 2023, households were particularly frugal: consumption increased by only 0.6% over the ‘year.
Olympic Games effect
The price increase in services, however, remains at 3%, down very slightly compared to February (3.1%). In this sector, wages constitute the majority of production costs, unlike industry or the agri-food sector which are more vulnerable to the prices of raw materials and energy. Service companies therefore continue to pass on the salary increases for 2023. Other factors are also pushing upwards, such as the cost of claims and the rise in climate risks, which have led insurers to significantly increase their prices.
This is the reason why, according to Stéphane Colliac, senior economist at BNP Paribas, inflation will plateau in the coming months, remaining between 2% and 2.5% year-on-year until the end of August.
“In the coming months, we expect that the prices of services will continue to grow at approximately the same pace as at the start of the year, even more so as the Olympic Games approach and, mainly, due to the expected increase air transport prices », explains Mr. Colliac. In August, inflation in services would therefore still be at 3.1%.
It will not be until September that the rise in overall prices should fall back below the 2% mark – the objective set by the European Central Bank. Particularly because the price of transport, accommodation in Ile-de-France or air transport will start to fall again after the summer period.