Despite an uncertain economic and health context, the Banque de France risked publishing its forecasts for the next 3 years. Growth, inflation, wages … Here is what awaits you in 2022.
As inflation hit 3.4% in November and the virulence of the Omicron variant prompted the government to tighten health restrictions, the year 2022 looks blurry. However, nothing to dampen the optimism of the Banque de France. The institution anticipates exceptional growth of 6.7% in 2021, before a 3.6% return in 2022.
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New increase in purchasing power
What impact on your purchasing power? After having accelerated in 2021 despite the surge in energy prices, the purchasing power of the French should fall by 0.5% in the first half of 2022, according to the latest estimates from INSEE. The Banque de France, on the other hand, anticipates a further increase in purchasing power over the whole of 2022 (+ 0.6%). The increase will however be less marked than in 2021 (+ 1.7%).
Both institutions recognize, however, that inflation will be a key variable in the coming months. Against a backdrop of raw material shortages and pressure on the price of energy, inflation is expected to peak in the fourth quarter of 2021, before dropping back below 2% at the end of 2022, provides the Banque de France. The uncertainty which surrounds our forecast is raised, however recognizes the governor of the Bank of France, Franois Villeroy de Galhau.
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Wages on the rise
Faced with this surge in inflation, preserving your purchasing power will depend above all on the ability of wages to keep up with rising prices. Here again, all signals are green in 2022 according to the Banque de France. In view of the good situation of the labor market, the institution in fact predicts a clear increase in wages over time.
Excluding the effects of partial unemployment, they would increase at a close to 4% in 2022. In 2023-2024, they should continue to increase at a sustained rate, around 3%, higher than that of the period 2012-2019 and close to that of the early 2000s, according to forecasts from the Banque de France. The increase is already visible on the minimum wage, which will increase by 0.9% in January after having already jumped 2.2% last October.
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Inflation in ambush
However, the revaluation of the pay grids could fuel inflation. We then speak of inflation loop: Faced with the observed and anticipated rise in prices, employees negotiate an increase in wages, which companies then pass on to prices to preserve their margins. Employees then demand a further increase in wages to protect their purchasing power against rising prices … And so on.
A situation that the Banque de France wants avoid all costs: We are (…) careful that there is no price-wage spiral out of control, declared Franois Villeroy de Galhau during an interview with Echoes. However, the institution is reassuring: given the good economic fundamentals, [le dynamisme des salaires] would not (…) deteriorate corporate margins, productivity gains in particular limiting increases in unit wage costs.