Food prices are expected to be up by 6.3% year-on-year in June - and general inflation up 5.4%, new figures from France’s state statistics organisation suggest.
Inflation has already reached high levels but is expected to continue rising, with consequential price and production increases, the statistics and economics institute Institut national de la statistique et des études économiques (INSEE) stated on May 9. The figures they give are:
April: Inflation hit 4.8%, year on year
May: Expected to exceed 5%
June: Expected to hit 5.4%
However, increases in the real price of energy are set to slow slightly (with a rise of 26% expected in June compared to 29.2% in March year on year). Regulated gas and electricity tariffs are currently capped, but bills which are based on the market rate are still subject to these price rises.
INSEE said: “Increases have already started to be passed on, albeit partially and gradually, to consumer prices. This trend is expected to continue in the coming months.”
It added that without the ‘tariff shield’ (bouclier tarifaire price limits) on gas and electricity, and the fuel ‘refund’ of 18 centimes on the litre, inflation would be set to reach a 7% year-on-year increase in May.
It means household purchasing power is still falling. It is expected to fall by 0.5 percentage points in the second quarter of the year, after having already fallen by 1.5 percentage points in the first quarter.
This is partly explained by the comparison effect of the ‘inflation bonus’ payment that was recorded in the fourth quarter of 2021, artificially boosting the spending power of lower income households for that period.
It comes as pawnshops in France have seen an increase in use as people seek a “quick and easy fix” to get more cash.
Rising inflation is being driven by shortages due to the war in Ukraine, as well as China’s zero-Covid policy, and the economy’s post-Covid recovery.