The confirmed drop in inflation continues to threaten the LEP yield, which is expected to fall again next August. In what proposals? We take stock.
It is an indicator that we now carefully examine each month. INSEE has just revealed the provisional results of the consumer price index (CPI) in February. Last month, prices increased by 2.9%. It’s a small event: for the first time in more than two years (January 2022), this monthly inflation has fallen below the 3% mark. That’s the good news.
This slowdown in inflation, however, will have consequences on the remuneration of regulated savings accounts. More precisely for that of Popular savings account (LEP), whose role is precisely to protect the savings of the French from inflation.
What will happen during the next update of its rate, scheduled for August 1? The news this time is less good: the decline is almost certain.
If INSEE’s projections are confirmed, average inflation for the first half of the year should be around 2.4%. However, alignment on this figure is one of the scenarios planned by the formula for calculating the LEP rate. In this scenario, the latter therefore risks going from one day to the next, from the current 5% to 2.4%, i.e. a yield divided by 2.
Towards a rate of 3.70% in August?
Don’t worry, that won’t happen. Because there is a guardrail. Be careful, this is a bit technical: the LEP rate cannot fall below the Livret A rate increased by half a point. However, this figure is likely to be higher than 2.4%.
Here’s how it’s going to happen. Around July 15, when updating the return on regulated savings, the Banque de France will calculate the technical rate of the Livret A, that resulting from its regulatory calculation formula. It will not be a question of modifying the Livret A rate (3% currently), frozen until January 2025. The challenge will be to check whether this figure, increased by half a point, is higher than the half-yearly inflation , and therefore more advantageous for the saver.
We can already assure that this will be the case. Given the inflation outlook, and the absence of a short-term fall in interbank rates (the other variable used in the formula), the technical rate of the LEP should be around 3.70%. Declining, therefore, but not in the same proportions as inflation. Clearly, the real yield of the LEP, adjusted for inflation, will remain very advantageous.
* monthly inflation excluding tobacco
In red: real yield of the LEP negative compared to inflation
In green: positive real yield of the LEP compared to inflation.
MoneyVox
The Banque de France will still have to make a choice: apply this rate of 3.70% from the calculation formula, as is the rule; or propose to the Minister of the Economy to derogate from this rule to set the rate as you wish. In this case, Bercy could, for example, choose to slow down the fall – this is what it did in February – and set the LEP rate at 4%. Answer in 5 months!