The horizon is not at all clear for the French economy. According to figures published by the National Institute of Statistics and Economic Studies (Insee), the end of 2022 should still be eventful in terms of the different macroeconomic indicators.
Energy inflation around 20%
No improvements in sight for one of the main concerns of the French for several months: the increase in prices. The inflation rate had passed the 6% mark in July before falling to 5.8% in August. According to INSEE data, inflation should rise again to 5.9% in September before falling 0.1 points again. And this trend should not fade until 2023 as the inflation rate should accelerate dramatically as winter approaches, returning above the 6% threshold, to 6.3% in November and even to 6.6% in the last month of the year.
Unsurprisingly, this price increase will continue to be largely driven by the energy element. In September, energy prices should rise by 19.2%, a growth that should exceed 20% in December (+20.8%). However, food prices continue to be hit hard with an increase that should be close to 10% in this back-to-school month and end the year at +11.7%. INSEE now places the inflation rate for the 2022 financial year at 5.3%.
Slight improvement in the purchasing power of households
This is the small positive note among the INSEE data. After consecutive falls of 1.2% and 1.1% during the first two quarters of the year, the purchasing power of households should rebound by 1.5% in the third quarter. The dynamism of wages, fueled by the revaluation of the minimum wage and social benefits, the purchasing power bonus or the rise in the point of the civil service index, explains this jump. This increase should moderate to 0.5% in the fourth quarter, which corresponds to the variation in the indicator per consumption unit in 2022 as a whole.
Meanwhile, growth is showing some signs of weakness as the end of the year approaches. After a slight recession of 0.2% in the first quarter, French GDP reversed the trend in the following quarter with an increase of 0.5%. But this increase should moderate already in the third quarter to fall to +0.2%. INSEE even forecasts zero growth in the fourth quarter, raising fears of a return to recession in early 2023.
Source: BFM TV
