An energy crisis that is rubbing off little by little on all aspects of the economy. Simplifying, here is how to summarize the galloping rise in prices in 2022 and 2023. For electricity, the worst would be over. But the rise in prices continues in food and services.
Finally, the famous inflation peak of January-February 2023 will be (a little) less severe than announced. In its latest economic report, INSEE anticipated a consumer price index (CPI) of 7% in January and February 2023, an unprecedented level in 30 years of INSEE’s monthly CPI archives! Finally, the peak will probably remain 6.2% in October and November 2022. In the economic note published on Tuesday February 7, INSEE anticipates an inflation rate of 6% in February, i.e. a level similar to that recorded in January.
Inflation will therefore be a little lower than forecast at the start of 2023. Before falling slightly, to 5.4% in the spring and then 5% just before the summer. But beware: This does not mean that the prices would drop! This means that the price level would increase more slowlyrecalls Julien Pouget, head of the business cycle department at INSEE.
Less inflation… but still unprecedented in the 21st century!
And if the peak at the beginning of 2023 is very slightly less than that of autumn 2022, the rise in prices remains very significant, a level unprecedented in the 21st century: INSEE speaks of a plateau around 6% since mid-2022, a plateau which is therefore likely to stabilize slightly below 6% but still above 5% in the coming months.
Moreover, will annual inflation in 2023 really be lower than the 5.2% recorded by INSEE for the year 2022 (compared to 2021 prices)? Not sure… Because you have to remember that the CPI was still sailing below 4% at the same time last year, then below 5% at the start of the spring.
Questioned by MoneyVox on this point, Julien Pouget, the head of the economic affairs department, recalls that INSEE does not make forecasts for the whole year at this stage, the institute offering forecasts at this stage until June: On average over the first half, we will have inflation a little above 5%. If we draw the line, we may be close to 5% [sur l’ensemble de l’anne 2023 par rapport 2022]. Above? At the same level as in 2022? Below? We have no forecast for the second half: we cannot give a precise forecast for the year 2023, repeats Julien Pouget, who adds that INSEE’s forecast for the first half remains conditional, in particular depending on the evolution of oil prices.
Food prices will soar again in 2023
After the January-February peak, heating, gas and electricity costs will stop rising, after the 15% increase (on average) in the tariff shield at the start of the year. INSEE predicts a fairly low contribution around mid-year for energy costs to inflation, while this has been the engine of rising prices for months.
Source: Insee, economic report of Tuesday February 7, 2023.
Good news? Not so fast…. Rising food prices won’t slow down. Far from it: food would remain the first contributor to inflation, provides INSEE. Food prices that will always rise 13% over one year on average, and this without stopping, during the first half of 2023. And the ricochet effects are felt little by little: The rise in the Smic can push up the prices of certain services, explains Julien Pouget. However, services weigh half of the price index: this means that even a slight price increase in services immediately weighs heavily on the portfolio of the French. If the peak may have passed, we can expect to see prices permanently on the rise, again, in 2023.
Taxes, RSA, retirement, salary… These increases that await you in early 2023 with record inflation