This is a figure that has not been seen since September 1985. Inflation in France accelerated again to 5.2% in one year in May, according to an initial estimate published on Tuesday, May 31 by statistical and economic studies by the National Institute (INSEE). Price growth in one year was 4.8% in April, which is already the highest in almost thirty-seven years.
In May, the prices of all consumer items listed on INSEE rose, especially the new increase in energy. “Energy prices should recover in line with the previous month’s decline in line with the recovery in oil prices”, describes the institute in detail, while the war in Ukraine caused a sharp rise in commodity prices. In one year, they increased by 28% after the April growth of 26.5%.
Food prices rose by 4.2%
Food prices increased by 4.2% (previous month by 3.8%) and prices of services by 3.2% (in April by 3%). The basis for comparison between European countries, “Harmonized index of consumer prices [IPCH] will increase by 5.8% in May after 5.4% in April.specifies INSEE.
However, the comparison between France and its European neighbors remains relatively flattering, with German inflation recording a new record on Monday (+ 7.9% in May). After a slowdown in price growth in April, inflation in Spain also rose to 8.7% year on year in May. In the United States, on the other hand, two recent indicators showed a slowdown in inflation in April, although it remained exceptionally high.
Insee is due to publish its final inflation estimate in May in mid-June. In its latest economic report, the institute assumed inflation of 5.4% in one year in June.
GDP fell by 0.2% in the first quarter.
France’s gross domestic product (GDP) finally fell by 0.2% in the first quarter, INSEE announced again and revised down its first 0% growth estimate published at the end of April. The decline in household consumption is remarkably even more pronounced than previously estimated by the National Statistical Office, with household purchasing power declining “clearly” 1.9% in the first quarter, burdened by inflation.
After recovering in 2021 with growth of 6.8% (also revised INSEE down on Tuesday), the French economy fell into recession at the beginning of 2022, penalized by both the Omicron variant and the effects of the war in Ukraine, the main one being rapidly growing prices.
The growth rate at the end of the first quarter (ie the growth we would have achieved in 2022 if the economy had stagnated for the rest of the year) is now only 1.9%, compared with 2.4%, which INSEE has so far estimated. At this stage, INSEE expects growth of 0.25% in the second quarter and the Banque de France 0.2%.
Consumption is falling for the second month in a row
At the same time, household consumption in France fell again by 0.4% in April, although this decline is less pronounced than the decline observed in March (-1.4% in the revised data), which ‘Insee reported on Tuesday’.
This second month of decline, after the recovery recorded in February (+ 0.9%), is mainly due to “Decrease in food consumption” (-1.1%), “Due to a decrease in the consumption of agri-food and agricultural products”specifies the National Statistical Institute.
According to INSEE, the decline in food consumption reached -1.6% in March. By contrast, household energy consumption increased by 0.7% in April (after -2.8% in the previous month), which is a recovery due to temperatures “Below the average”which led to an increase in gas and electricity consumption (+ 2%).
Fuel consumption continues to decline
While pump prices remain high, despite a government-imposed premium of 15 to 18 cents per liter, fuel consumption continued to decline in April (-0.9%). However, this decline is much less pronounced than in March, when it reached 4.5%.
Consumption of industrial goods, which accounts for 44% of total consumption, continues to decline, but at a slower pace than in March (-0.3% versus -0.6%). French households consumed more clothing and textiles in April (+ 0.5%), with purchases of footwear in particular increasing, according to the institute. In April, consumer durables were driven by purchases of household appliances, electronic products and communication equipment, while purchases of furniture declined. “significant decline”according to INSEE.
Finally, household consumption has increased by 7.2% compared to April 2021, but this comparison is difficult to use because restrictive measures were introduced last year due to the Covid pandemic. -19. Thus, the consumption of clothing and textiles in April 2022 showed a spectacular increase of 189.6% compared to the same period last year, when insignificant enterprises were closed. On the other hand, food consumption was weaker this month in April than last year (-3.1%).