In one year, from December 2020 to December 2021, prices have increased by 2.8% according to INSEE. Highest since September 2008! Inflation weighs by definition on purchasing power… But this indicator also has many automatic or indirect consequences. Overview.
Inflation losers
A circle of hell. Prices are rising… in fact pushing the consumer price index (CPI) to a level not seen since 2008, 2.8% in December as in November 2021… an increase which causes other unpleasant surprises.
The owners. The sentence was known from mid-December: since 2018, the cadastral rental value, that is to say the theoretical rent that an owner could apply if he rented out his accommodation, and which serves as the basis for calculating the property tax is revalued each year according to the harmonized consumer price index (HICP) for the month of November. Last year, this base was virtually unchanged, with an HICP of 0.2%. But the situation is changing this year: the HICP for November 2021 is 3.4%! Requested by MoneyVox, the General Directorate of Public Finance (DGFiP) confirms that the revaluation rate is indeed 3.4% for 2022. .4%, since the basis of the calculation formula increases by 3.4%. An increase which can be added to a municipal or departmental increase, even if this announced increase could slow down the ardor of municipalities tempted to increase even more strongly this local tax. Note: other local taxes such as the household waste collection tax are calculated on the same basis and will therefore be subject to the same increase of at least 3.4%.
Some tenants. Beware of the headache: the rent reference index (IRL) is calculated on the basis of an average of inflation over the last 12 months, excluding tobacco and rent. Thus, in the 4th quarter of 2021, the IRL rose sharply to 1.61% against 0.83% in the previous quarter. However, landlords can revalue their rent claimed from their tenants each year in the first quarter on the basis of this reference index: If a clause in the lease provides for it, the rent can be revised once a year, on the date indicated in the lease or , failing that, the anniversary date of the lease, details to the housing agency (Anil).
Inflation winners
The winners of inflation? Let’s say inflation winners, in quotes! Because any annual revaluation close to inflation only compensates for the rise in prices… In other words, you lose less than others. Except if you increase your salary by 5% in 2022, it’s hard to talk about winners… Nevertheless, some automatic increases are more substantial than others.
Some wages. The minimum wage will certainly only increase by 0.9% on January 1, 2022, but this automatic increase follows another automatic increase in the minimum wage, as of October 1, 2021, by 2.2%. If it has not been the subject of any boost from the government, taking advantage of two automatic increases, the minimum wage is keeping pace with the rise in prices. Bringing in its wake the wages of which the collective agreement or the group agreement provides for an automatic revaluation each increase in the minimum wage. The monthly gross minimum wage is now 1,603.13 euros, and the net minimum wage of 1,269 euros.
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Holders or future holders of LEP. Faced with a Livret A rmunr 1%, bank books close to zero or funds in euros for life insurance which are falling little by little below the 1% bar, the Livret d’pargne populaire (LEP) will act as a quasi anomaly in the landscape of risk-free savings. The new formula for calculating its rate gives it the role of a bulwark against inflation for the 15 million low-income savers who have access to it. With a return net of all taxes of 2.2%, it practically fulfills this role.
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Increases confirm…
RSA. The active solidarity income is revalued each year on April 1, according to inflation. But beware: it takes into account the average of the CPI over the last 12 months, stopped in February. What moderate the increase. This should still approach 2% since the CPI started its sharp rebound last March.
Family allowances and other family benefits. AAH, Aspa, family allowances, disability pensions, activity bonus… All these benefits are, like the RSA, reassessed each year according to inflation, on April 1st.
PLA. Another impact of inflation… Except in the event of a freeze decided by the government as in 2018, personalized housing allowances are reassessed on the basis of the reference rent index, mentioned above, which itself includes inflation. APLs should therefore be reassessed upwards on October 1, based on the IRL for the 2nd quarter of 2022, and more frankly than last October (+0.42%).
Rates for motorway pages as of February 1. The concession companies can increase their prices on the basis of inflation, on 1 February. AFP was able to consult in December a document submitted to the Minister for Ecological Transition proposing an increase of 2.05% on the Motorways network in the South of France, and 2.05% on the APRR network.
The false winners
Revaluations, of course, but whose calculation formulas are such that the increase does not make it possible to follow the sharp rebound in inflation. Due to averages over several months causing strong inertia, or due to a formula stopping a few months in advance, before the acceleration of inflation.
Withdrawals. The basic pension is increased by 1.1% as of January 1, 2022, the fault of a calculation making the average of the CPIs of the last 12 months (1), at the end of October 2021. This same rate of 1.1% also applies to many supplementary pension plans: craftsmen, merchants, non-permanent civil servants, etc.
Minimum old age. The ASPA (solidarity allowance for the elderly), during the RSA at retirement age, follows the same rate of revaluation (1) that basic retirement pensions: 1.1%.
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Income tax schedule. The thresholds of the 2022 tax scale, which will apply to 2021 income, for tax payable in 2022, increase by 1.4%. Good or bad news? A little of both… An increase in the thresholds of the scale is rather good news for taxpayers, since an increase in the thresholds lowers the level of income from which you are taxed. But the rise in prices (2.8%) is going twice as fast this year as this revaluation of the scale of 1.4%, the fault of inflation retained dating back a few months… In short: the scale does not increase enough quickly to keep up with inflation and it will be ultimately rather unfavorable to taxed households.
Life annuities. The annuities paid by the insurer at retirement age can be adjusted each year according to inflation. But it all depends on your contract.
A booklet. Admittedly, the Minister of Economy and Finance Bruno Le Maire opted for the boost option: the calculation formula, which mixes inflation and an interbank rate (ster) led to a rate of 0.8%. The Livret A will drop to 1% in February 2022. This is still far from inflation, unlike the LEP.
Livret A: the real return still largely negative despite the doubling of the rate
Transport, energy, food… The prices that soared in 2021
As explained by the head of the economic affairs department at Insee, Julien Pouget, the surge in inflation is mainly due to the rise in energy prices.
However, the detail of INSEE’s analysis reveals some surprising movements between December 2020 and December 2021, consequences of the health crisis: +21% on frozen fruits, +50% on natural gas and town gas , + 21% on diesel, but -4.9% on cleaning equipment or -3.9% on medical products and devices.
(1) Revaluation provided for in Article L161-25 of the Social Security Code.