This is the first time in three years that prices have risen. Inflation in France has fallen below 2%: the consumer price index calculated by the National Institute of Statistics and Economic Studies (INSEE) fell to 1.9% in August, according to the first estimates published on Friday 30 August. In July, it stood at 2.3%.
This drop in inflation could be explained by the clear slowdown in energy prices, INSEE points out: in one year, electricity prices have slowed down, due to a “base effect”, since regulated electricity prices had increased on 1Ahem August 2023. Prices of motor fuels and other fuel oils have also slowed due to falling oil prices.
Food prices, which experienced double-digit inflation at the height of the crisis, have been trending more reasonably for several months now. In August, as in July, food prices rose by only 0.5% year-on-year, compared with 11.2% a year ago.
“Let’s swing”
On the other hand, services, particularly accommodation and transport, remain the sector where prices are still accelerating, due to wage costs. The increase, 3.1% year-on-year, is driven by the accommodation and transport sectors. “The Olympic Games have had a very strong effect on the services sector”comments Mathieu Plane, deputy director of the analysis and forecasting department of the French Observatory of Economic Conditions (OFCE).
Does this drop below 2% mean that inflation is already behind us? “Inflation is over”Mr. Airplane continues. “But over the next two or three months, the price index could experience up and down variations. We will fluctuate around 2%, due to base effects, if we do not have geopolitical surprises or effects linked to energy prices.”
“Disinflation is expected to continue next year, thanks to the possible fall in the price of electricity. [entre − 10 % et − 15 % en février 2025] compared to an increase of almost 10% in February 2024”For his part, says Stéphane Colliac, French economist at BNP Paribas. “In February 2025, inflation would be only 1% year-on-year.”
However, the effects of the inflationary crisis are still there. The slowdown in inflation “Not only does it not mean that we are going back to the previous pricesexplains Jonathan Marie, professor at the Sorbonne-Paris-Nord University, But over the period from 2021 to 2024, real wages lost around 2% in France.”.
You have 30.33% of this article left to read. The rest is reserved for subscribers.
