Preliminary data released by the French National Institute of statistics and Economics (INSEE) estimated that the consumer price index rose to the highest level in nearly 40 years in March 2022.
According to the data released by the French National Institute of statistics and economics, the French consumer price index is estimated to have increased by 4.5% year-on-year in March, following a year-on-year increase of 3.6% in February, the highest level since December 1985, Figaro reported. In addition, the consumer price index rose 1.6% month on month in March, indicating that inflation is still rising.
The French National Institute of statistics and economics explained that the sharp rise in inflation was mainly due to the accelerated rise in energy and food prices and, to a lesser extent, the rise in service prices. International conflicts have not only dealt a heavy blow to the energy market, but also exacerbated price pressure in the agricultural raw material market. In the months of covid-19 epidemic improvement and rapid economic recovery, the price pressure has been very high.
Energy prices in France soared by 29% in a year, and the average price of fuel remained above 2 euros per liter. Fresh Shenzhen Agricultural Products Group Co.Ltd(000061) prices surged 7.2% in a year, slightly higher than expected. Moreover, the inflation situation in France may further intensify. At present, inflation is mainly concentrated in energy and food, which account for 10% of the consumer price index, while the prices of the remaining 90% of goods and services may continue to soar.
Although the assistance provided by the French government has exceeded 30 billion euros since the autumn of 2021, the purchasing power of French households is expected to decline significantly in 2022. According to the latest estimates, in the first quarter of 2022, French household consumption will decline by 1.4% year-on-year and 0.5% month on month. During the period of 2020, the index of family morale released by the Institute showed a decline of 19-6 percentage points, which was close to that of the national economic blockade in France. The French are well aware of the risks posed by inflation and are worried about their financial situation. The proportion of households who believe that prices will rise in the next 12 months has increased by 50 percentage points, reaching the highest level since 1972.
The National Institute of statistics and economics of France proposed in mid March that international conflicts would lose one percentage point of French economic growth. The economist Charlotte de Montpellier pointed out that if the economic growth slows down, it will reduce the inflationary pressure. It is expected that the annual inflation rate will remain above 4% on average in 2022, and then will fall back rapidly and fall below 2% in 2023.
Affected by inflation, the French Ministry of labor announced that it would raise the minimum wage from May, with an increase of 2.4% to 2.6%. The specific range will be determined when the French National Institute of statistics and economics released the final inflation data for March in mid April.
