Inflation is slowing down in France: after a rise of 0.6% in April, which brought the year-on-year shift to +5.9%, the month of May was marked by a very slight overall decline of 0 .1%. Headline inflation over one year is therefore down to 5.1%, according to provisional figures for May published on Wednesday 31 May by INSEE.
This decline is due to a slowdown in food inflation – which has become the main driver of price increases – which fell from 15% in April to 14.1% in May. Energy prices are also continuing to fall sharply: they rose by 2% in May, compared to 6.8% in April and… 27.8% in May 2022!
After the surge in labels on the food shelves, the fear was to see the prices of services – hairdressers and dry cleaners, personal and business services, insurance, rents, transport, communications, in the end about half of the economy – take over to pull inflation up. The opposite has happened, since headline inflation in services stands at 3%, down slightly from the start of 2023 (3.2%).
This fear therefore seems to have been dismissed for the moment, but not for the best of reasons: companies, a little more worried than in the first quarter of the evolution of the economic climate, are putting a soft pedal on prices so as not to make matters worse. . “The slowdown in selling prices is the corollary of an eroding economic climate”, emphasizes Julien Pouget, head of the business cycle department at INSEE. Especially since consumers only have a tight budget given food inflation.
Only exception: transport
“For the moment, we are not seeing any drift in services, whose prices remain relatively under control, while costs are increasing, especially labor costs”confirms Mathieu Plane, Deputy Director of the Analysis and Forecasts Department at the French Observatory of Economic Conditions (OFCE), who explains: “With the possible exception of transport, this is a sector where we do not see the margins increasing. » Since May 2022, the rate of increase in this sector has never exceeded 3.9%, while food or energy have posted double-digit increases. The only exception: prices for transport services (planes, trains, buses, etc.), which increased by nearly 10% according to April figures, driven by energy prices.
Moreover, continues Mr. Plane, “the contribution of services to inflation is not increasing”. Since May 2022, they have represented 1.5 points out of headline inflation of around 6%, i.e. a quarter of the total. And this while services correspond to half of consumption and GDP.
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