Inflation should accelerate further to reach 6.8% at the end of the year, according to INSEE

This surge in prices should weigh on the purchasing power of the French, whose decline is estimated at 1% in 2022.

Unlike previous presidential elections – in particular that of 2017 – the re-election in April of Emmanuel Macron did not generate a boost in household confidence which remains “weakened”, notes INSEE in its new forecasts for the year. 2022. Faced with the shock of the war in Ukraine after the coronavirus crisis, which continues to weigh on the French economy, the picture is indeed very gloomy with growth which should ultimately increase by 2.3% this year, against 4% anticipated by the government in the finance law in December.

Mainly due to inflation, which should continue to soar to reach 6.8% in September over one year and settle at 5.5% on average over the year, against 1.6% in 2021. This explosion prices, which is now spreading and will continue beyond the energy sector alone, would weigh heavily on the purchasing power of the French, whose decline is estimated at 1% over the year as a whole. “The previous marked decline in purchasing power dates back to 2013” ​​with a contraction of 1.2%, recalls INSEE. What also explains the very modest increase in consumption, estimated at 2.3% in 2022, with households who will limit their spending and continue to save

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This forecast on purchasing power would have been worse without the support measures, amounting to several billion euros, to protect the portfolio of the French, whether they are recorded or have already been announced. On the one hand, the price shield on energy prices (gas and electricity) as well as the rebate at the pump of 18 centimes per liter of petrol have undoubtedly made it possible to mitigate the explosion of inflation. Observed at 5.2% in May over one year, the rise in prices would have exceeded 7% without government action.

Uncertain forecasts

On the other hand, household income should increase by 4.1% over the year, against 4% in 2021, due in particular to support measures. In detail, while gross disposable income fell in the first quarter, it should recover between April and June, supported by wage increases. And, for the second half, this progression would be “very dynamic”, estimates INSEE, which integrates the “purchasing power” package whose presentation to the Council of Ministers is scheduled for July 6.

This package should include the renewal and tripling of the exceptional Macron bonus, the revaluation of 4% of pensions and social minima, the unfreezing of the index point for civil servants… In the absence of these various costly measures for the coffers of the State, household income and, more broadly, their purchasing power would be 1 point lower over the year as a whole, estimates INSEE.

However, these forecasts remain extremely uncertain due to the absence of an absolute majority granted to President Macron during the legislative elections and therefore the great difficulty that the government will have in passing its laws. Starting with the examination of the 2022 amending budget, which risks quickly turning into a rat race in the Assembly…

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