The French economy performed rather better than expected at the start of the year: while the National Institute of Statistics and Economic Studies (Insee) expected a sluggish first quarter, the gross domestic product (GDP) increased by 0.2% over this period, according to data published Tuesday April 30. This digit “reflects the solidity of the economy”immediately reacted the Minister of the Economy, Bruno Le Maire, who expects growth of 1% in 2024.
An objective which is not unrealistic given the data published on Tuesday: the growth achievement – the figure which would be reached at the end of the year if the next three quarters were sluggish – already stands at 0, 5%, specifies Nicolas Carnot, director of economic studies and syntheses at INSEE. The Banque de France, which forecasts slightly lower growth of 0.8% for the year, judges that this figure of 0.2% is ” consistent ” with his prediction.
The main lever of activity, since it represents half of GDP, household consumption is showing signs of trembling: it increased by 0.4% between January and March, a change in trend after two years of sluggishness. The slowdown in prices is undoubtedly no stranger to this: in April, inflation rose to 2.2%, compared to 5.9% in April 2023, INSEE also indicates. Food prices, in particular, have seen a marked slowdown: the double-digit increases of 2023 are now behind us – over one year, the increase is only 1.2%. Fresh products, in particular, even saw a drop of 0.7%. It is now the prices of energy (+ 3.8%) and services (+ 3%) which have increased the most over twelve months.
Opportunity purchases
As a result, food consumption increased by 0.5% in the first quarter, after having plunged by 4.8% in 2023. Purchases of manufactured goods remain more reasonable (+ 0.1%) and above all, large purchases such as that those of automobiles are down 3.5%. A drop undoubtedly linked to end-of-year promotions and the end of ecological bonuses, which had prompted opportunity purchases at the end of 2023. Consumption of services (+ 0.7%) is trending well, particularly accommodation and catering, up 1.5% over the first three months of the year, and transport services up 2.1%.
In the second quarter, significant price drops on certain manufactured goods could provide an additional boost to consumption, especially as the volume of French savings remains particularly high. “This is where we have the most potential rebound capacity”, recalls Mathieu Plane, economist at the French Observatory of Economic Conditions. Especially since purchasing power, at the same time, should regain some dynamism, thanks to the revaluation of pensions and social benefits which took place at the start of the year, and to salary increases which should exceed inflation during 2024 .
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