“Stimid restart” of the French financial system, in accordance with INSEE | EUROtoday
After stagnation, clearing up? INSEE foresees development for the primary half of 2024 “ moderate », of the order of 0.2% per quarter, while inflation continues to slow down. By mid-year, the rolling price increase over twelve months would only be 2.6%, instead of 3.1% in January 2024 and 3.7% in December 2023. These forecasts, published Wednesday February 7, describe a “timid restart of activity »after two last quarters of 2023 that were completely sluggish and a year which ended with a modest 0.9% growth.
At half mast since the start of the inflationary crisis, “consumption should be the main driver of the French economy”, estimates Nicolas Carnot, director of financial summaries at INSEE. Supporting this conviction is the lull that’s being felt in costs, notably meals costs, and the good points in buying energy that would outcome from future wage will increase and the revaluation of social advantages. “Food inflation has been stable for several months”, argues Mr. Carnot. This would stand at 1.5% over one yr in June 2024, in comparison with 5.7% in January 2024.
Long the primary driver of inflation, meals, which peaked in May 2022, is now being supplanted on this position by companies. A sector the place costs basically rely on labor prices, whereas these of manufactured merchandise are additionally primarily based on uncooked supplies and inputs. In the center of the yr, the rise in costs of companies over twelve months would thus attain 3% – twice as a lot as meals -, whereas a number of specialised institutes corresponding to WTW or LHH estimate that wages may improve by 4% on common this yr, to a minimum of partially meet up with inflation. The costs of manufactured items, however, will nearly not contribute to inflation, in accordance with INSEE.
What about French financial savings?
The complete query is whether or not households will make the most of this newfound shopper urge for food to dip slightly into their financial savings (Livret A, LDD and even life insurance coverage contracts). The financial savings charge in France stays considerably greater than earlier than the well being disaster, whereas within the United States, the place development reached 2.5% in 2023, a lot of the nest egg amassed throughout Covid was spent. Everything will rely on the context: “The renewed confidence could encourage households to draw on their savings, while, conversely, an excessive wait-and-see attitude could lead to a new semester of stagnation”notes INSEE.
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