Inflation fell to 5.6% in France in September


Posted Sep 30, 2022 9:24 AMUpdated on Sep 30, 2022 at 2:32 PM

Inflation continues to decline in France. In September, the rise in consumer prices stood at 5.6% over one year, according to data published this Friday by INSEE (6.2% according to the harmonized Eurostat index).

This figure confirms the slowdown already observed in recent months (+6.1% in July and +5.9% in August) linked mainly to the easing of prices for services (+3.2%) and especially energy (+17.8% over one year). Over one month, consumer prices fell by 0.5%, against an increase of 0.5% the previous month.

The fuel discount effect

For the third month in a row, prices for a barrel of Brent have calmed down. In addition, this lull is largely due to the tariff shield on the price of gas and electricity and the discount on gasoline increased from 18 cents to 30 cents in September. The impact of the two measures is assessed by the statistical institute at 2.5 points in September.

This public support allows France to maintain its inflation at a level significantly lower than its European neighbours. In September, prices rose by 10% in Germany and again reached 9% in Spain.

Reacting to the publication of Insee, Charlotte de Montpellier, economist at ING, nevertheless pointed to “an expected drop, but a trompe l’oeil”. “The drop in inflation in September cannot be taken as a sign of moderation in global inflationary pressures,” she warned.

Expected rise in inflation

While the discount at the pump must be reduced to 10 centimes in November and December before disappearing on 1er January 2023, INSEE also expects inflation to rise to 6.6% at the end of the year.

Unlike energy, the other posts continue their mad race forward. The prices of food products continue to accelerate, increasing by nearly 10% over one year, while those of manufactured goods climb by 3.6%.

Stagnation

In this context of still sharp price increases, household confidence is at its lowest since June 2013. Consumption of goods, in volume terms, stagnated in August, after falling 0.9% in July. Expenditure on manufactured goods certainly increased by 1.2%. On the other hand, the French reduced their energy consumption and even more their food purchases, down 1%.

Faced with increasingly expensive food products, “four out of five households will now be very careful with their food expenses”, alerted this week in “Les Echos” the general manager of Nielsen, Xavier Segalié, already signaling a modification of the eating behaviors.

Threat to purchasing power

Inflation weighs on purchasing power. According to INSEE, it should stagnate in 2022, but will fall back by 0.5% per consumption unit. The year 2023 promises to be another difficult year for households. Even if multiple unknowns remain (change in energy prices, value of the euro, etc.), inflation should remain high.

In its latest projections, the Rexecode Institute anticipates a decline in purchasing power. Bercy nevertheless wants to be more optimistic and has forecast an increase of 0.9% in its finance bill for 2023.

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