French prices rise at highest rate in nearly 40 years household purchasing power has fallen sharply

2022-06-22 0 By

The consumer price index rose at its highest level in nearly 40 years in March 2022, according to preliminary data released by France’s National Institute for Statistics and Economic Research (Insee).France’s consumer price index is estimated to have risen 4.5 percent year-on-year in March, the highest level since December 1985, after rising 3.6 percent in February, according to data released by the National Institute for Statistics and Economic Research, Le Figaro reported.Moreover, the consumer price index rose 1.6 per cent month-on-month in March, suggesting inflation is still picking up.The sharp rise in inflation was mainly due to accelerating increases in energy, food and, to a lesser extent, services prices, EXPLAINED INSEF.International conflict has not only hit energy markets hard, but also exacerbated price pressures in agricultural raw materials markets.Price pressures have been high in the months since the COVID-19 pandemic improved and the economy recovered quickly.French energy prices have soared 29 per cent in a year, with the average price of fuel remaining above €2 a litre.Fresh produce prices surged 7.2 per cent in a year, slightly faster than expected.And French inflation is likely to rise further. Currently, inflation is concentrated in energy and food, which account for 10 percent of the consumer price index, while prices for the other 90 percent of goods and services could continue to surge.French households’ purchasing power is expected to fall sharply in 2022, despite more than €30bn in state aid since autumn 2021.According to the latest estimates, French household consumption will fall 1.4% year-on-year and 0.5% quarter-on-quarter in the first quarter of 2022.France’s national Institute for Statistics and Economic Research’s indicator of household morale has fallen by 6 percentage points in a month and is close to the lows reached during the coronavirus lockdown in 2020.The French are well aware of the risks of inflation and are worried about their finances, with the share of households saying prices will rise in the next 12 months up 50 percentage points to the highest level since 1972.France’s National Institute for Statistics and Economic Research suggested in mid-March that international conflict would shave one percentage point off French growth.Economist Charlotte de Montpellier noted that if growth slows, it will reduce inflationary pressures, with inflation expected to average above 4% throughout 2022, before falling rapidly and falling below 2% in 2023.In response to inflation, the French Labor Ministry said it would raise the minimum wage from May. The increase is likely to be between 2.4% and 2.6%, to be determined when the National Institute for Statistics and Economic Research releases final inflation figures for March in mid-April.(Overseas network – Paris – Rugia) source: overseas network