The Banque de France confirmed on Monday its forecast of a modest 0.1% increase in France’s gross domestic product (GDP) in the second quarter, against a backdrop of a sharp slowdown in price rises. After having increased by 0.2% in the first quarter compared to the previous three months, the economy should continue to show resistance between April and June, specifies the latest economic report published this Monday.
In the month of June alone, activity “increased slightly” in industry, and more strongly in services and construction (mainly finishing work), according to the monthly survey carried out by the Banque de France among some 8,500 companies between June 28 and July 5. Industry should stabilize in July, advance in services and fall back in construction.
Price rise slows
On the price front, the Banque de France reported a sharp slowdown in price increases for businesses.
These declines are reflected in a lag in the retail prices that households pay when buying. In the industry, 8% of companies said they had raised their sales prices in June -the lowest since the beginning of 2021- compared to 36% a year earlier and even 6% said they had lowered them.
In the food industry, 9% of companies had raised their prices last month, compared to 39% in June 2022. This downward trend, which should continue in July, is also observed in construction and services.
“This comforts us in the diagnosis” of a more marked ebb in the rise in consumer prices during the second half of 2023, which would continue the following year, we specified at the Banque de France.
According to a provisional figure from the National Institute of Statistics (Insee), inflation reached 4.5% annually in June. Last month, supply difficulties stabilized in industry and construction, while contracting difficulties continued to affect half of the companies surveyed, the Banque de France said.
Source: BFM TV
