Rate of the Livret A boost, increase in the minimum wage, APL… These boosts that will do you good

INSEE published a crucial indicator on Wednesday on the pace of price increases in June, which reached 5.8% over one year. An announcement that will lead to a series of upgrades for individuals.

This is an announcement that will have multiple consequences. This Wednesday, the National Institute of Statistics and Economic Studies (Insee) published consumer price index (IPC) final for the month of June. It confirms the first provisional estimate released on June 30, which reported a price increase of 5.8% over one year, against 5.2% in May. The CPI is this instrument which makes it possible to measure inflation and to estimate, between two given periods, the average variation in the prices of products consumed by households, explains INSEE. Here are the repercussions for the purchasing power of individuals.

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25euros more for the Smic

In May, the minimum wage was increased by 2.65% to reach 1302 euros net, or 1,645.58 euros gross. An automatic increase which applies as soon as prices increase by more than 2%, over a short period, for the poorest 20% of the population. This May revaluation, based on the March CPI, will be repeated since the consumer price index for June once again shows a price increase of 2.01% compared to March. The net minimum wage will therefore be increased by approximately 25 euros in August to reach nearly 1328 euros net for full-time work.

Increase in rents of up to +3.5%

The consumer price index delivered by INSEE tomorrow will be used to calculate the rent reference index (IRL) based on the average inflation of the last 12 months. This sets the ceilings for the annual rent increases that landlords can demand for the coming quarter, on the anniversary date of the lease.

With the jump in inflation, the IRL, which reached +2.48% in the first quarter, will de facto increase further by around 3.5% for the second quarter. Translation: landlords will be able to request a rent increase close to 3.5%. According to economist Pierre Madec, of the French Economic Observatory (OFCE), the IRL should even reach more than 5% by the end of the year. But rents won’t go up that fast. The government has promised to cap rent increases for one year at 3.5%, a measure decried by the consumer association CLCV, which called for an outright freeze on rents.

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Housing aid increased by 3.5%

It is on the basis of the IRL for the second quarter that the change in housing aid applicable from October is calculated each year. Faced with the sharp rise in prices, the government wishes to increase them by 3.5% with retroactive effect from July 1. A measure which appears in the purchasing power bill, like the 3.5% rent cap, two measures which must be examined from Monday in the Assembly. A text whose effectiveness is uncertain since the executive only has a relative majority to have this text adopted.

Booklet A rate at least doubled

The publication of the final CPI by Insee on Wednesday gives the green light to the Governor of the Banque de France so that he can send his recommendation to the Minister of the Economy on the new rate for the Livret A, from 1 August. Its complex calculation formula takes into account in particular the average inflation over the last six months, therefore between January and June in this case.

Based on the final inflation figure released two weeks ago, the new rate for the A bookletand its false twin, the Sustainable and solidarity development booklet (LDDS) should be 2%, against 1% since February 1. But the Banque de France can very well also offer a higher rate to preserve the savings of the 8 out of 10 French people who have a Livret A. This is the first option that the Banque de France has just chosen. A doubling of the Livret A rate, from 1% to 2%, from August 1 in the crowd of rising inflation, is possible, the governor of the Banque de France confirmed on France Info on Wednesday, excluding any sudden exceptional thumb.

Despite everything, the real return on the investment preferred by households will remain clearly negative with a rise in prices which should be close to 7% in September. According to a survey carried out by the YouGov institute for MoneyVox, 8 out of 10 French people nevertheless claim a remuneration of the Livret A indexed to inflation. Small consolation, the rate of popular savings booklet (LEP) should rise from 2.2% to 4.6% next month.

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