Linflation attributable to the increase in the cost of energy and agricultural raw materials, linked to the war in Ukraine, could exceed the 5% threshold in 2022. The end of the month will be increasingly difficult for low-income households and for retirees whose only income is their pension. With the same quantity of money they will no longer be able to buy the same quantity of goods, for lack of sufficient income.
In this context of crisis, purchasing power is now the priority of the French, ahead of health and climate change. Purchasing power depends on price and income. Therefore, to distribute more purchasing power, two types of measures are possible. The first type consists of freezing consumer prices during the inflationary period.
However, in an inflation by costs, this measure can only be temporary. It would risk putting small and medium-sized enterprises in difficulty, and therefore risk weakening employment. This is why raising wages remains the best suited and most effective measure for sustainably preserving household purchasing power. This must be achieved through the mutual commitment of the State and companies.
The major role of the state
Indeed, in an inflationary period, purchasing power is the business of the public authorities. The State is one of the players in the purchasing power of economic agents in both the public and private sectors. In order to preserve the purchasing power of households, the social State could, as it began to do with the “ whatever the cost”, act directly on disposable income by increasing certain social benefits targeted at low-income households.
The State also has the ability to increase the minimum wage again, as well as the index point for civil servants. It could also index pensions to prices to guarantee the purchasing power of pensioners. Indexation would in no way be a long-term threat to the balance of our distribution system according to the different scenarios of the Pensions Orientation Council (COR).
Moreover, it is also capable of administering energy prices, thus avoiding any speculation on their prices. This regulation reducing the fluctuation of the prices of gas, electricity and fuel would limit their various irregular increases and would encourage the medium and long term ecological transition of companies since their environment would be less uncertain in this context of energy crisis.
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