It is public enemy number one, the target to be defeated, the “first of all battles”, according to the Minister of Economy and Finance. Inflation slowed down in September, according to initial estimates from INSEE (National Institute of Statistics and Economic Studies), but remains at a high level. These first, provisional data will have to be confirmed by statisticians on October 13. Inflation stands at 4.9% year-on-year for the second consecutive month. “The slowdown over one year in the prices of food, services and manufactured products” is “counterbalanced by the acceleration in energy prices,” comments INSEE in its press release.
In recent weeks, the rise in fuel prices has particularly attracted attention. Diesel and gasoline are sold at more than 1.90 euros per liter everywhere in the country, arousing anger among the French and concern within the government. Operations at cost price in supermarkets, price freezes in TotalEnergies stations, fuel checks for the most modest households: measures to stem this increase in fuel prices have multiplied in recent days, without being able to avoid an inevitable rise in prices, scope by the cost of the raw material, oil, which is soaring.
The general rise in prices is also driven by food products. Their prices continue to rise, even if the increase has been less and less vigorous in recent weeks. The prices of food products thus increased by 9.6% between September 2022 and September 2023, while they had jumped by 11.2% year-on-year in August. The slowdown in food inflation is particularly noticeable for fresh products, the price of which increased by 4.1% year-on-year in September after increasing by 9.4% in August.
Also read: Ecology in a time of inflation, the difficult exercise of Emmanuel Macron
This so-called “food” inflation particularly weighs on the budgets of households who are forced to change their consumption habits. Distributors are seeing the effects of “de-consumption”, that is to say a drop in the volume of products purchased by consumers. The success of private labels also testifies to this change caused by inflation.
Whether it is fuel or food, and before that electricity, the question of the general rise in prices is of great concern to the government. The Minister of Economy and Finance, Bruno Le Maire, insisted this week that this was “his first fight”. To stop this infernal increase, the main instrument is monetary. The European Central Bank has been raising its key rates for more than a year, reaching a record level in September.
Inflation is expected to continue to decline in the coming months, according to experts. In its latest macroeconomic projections, published in June, the Banque de France wrote that during the last six months of the year, “total HICP inflation (harmonized consumer price index) would gradually decline [...] ], to return to around 2% by 2025, subject to the absence of new shocks on imported raw materials. It is expected, this year, at 5.6% on annual average, compared to 5.9% last year. Same observation for INSEE: in their June economic report, national statisticians said they expected the prices of food products to slow down significantly, “without necessarily falling on average”. Overall, the rate “would return to 4.4% over one year in December”, the lowest level since March 2022.