Slight rebound in consumption in France, curbed by inflation

After a sharp decline of 1,6% in December, household consumption expenditure on goods increased "significantly" by 1,5% in January, a rebound attributed by the National Institute of Statistics to the strong consumption of energy (+4%) "as a result of the energy check".

This check allocated by the State to the most modest households having already been paid, the increase in electricity and gas expenditure is explained by a smaller share borne by public administrations, and therefore a larger share borne by households. .

The sending of an exceptional energy check to 12 million low-income households, in the amount of 100 to 200 euros, began on December 12 and continued until the beginning of February.

"Actual household consumption of electricity and gas fell in January," said INSEE.

"Optical illusion"

In fact, "it's an increase in trompe-l'oeil. The rebound is not as strong as what the overall figure suggests", commented Charlotte de Montpellier, economist at ING, interviewed by AFP.

While consumption of manufactured goods (1,3%) - during the sales period - and food consumption (0,6%) also rose in January, the sharp rise in consumer prices continued to weigh down.

"We would have had a more significant rebound in consumption" if there had been no inflation, underlined the economist.

Inflation rose to 6,2% over one year in February, after 6% in January and a slight decline to 5,9% in December.

This increase could be explained by the acceleration in the prices of food and services, while energy prices would slow down, according to INSEE.

Since consumer prices took off in 2022, as a result of post-Covid supply chain disruptions and then the war in Ukraine, the inflation rate has returned to levels not seen since the 1980s.

It should gradually decline to 5% in June, predicts INSEE.

In detail, food products became more expensive in February by 14,5% over one year after having increased by 13,3% in January.

The prices of services also rose more rapidly than in January (+2,9%), due to the rebound in the prices of transport services.

With the end of the winter sales, the rise in the prices of manufactured products also accelerated (+4,6%).

Finally, the growth in the cost of energy slowed markedly (14% over one year, after 16,3% in January), the 15% revaluation of regulated electricity tariffs on 1 February being mitigated by the decline in prices of petroleum products.

Slowed growth

Due to this increase in the ceiling of the tariff shield decreed by the State, "the energy shock is now affecting households in France", later than in other European countries, noted Charlotte de Montpellier.

And for food, new price increases are to be expected from March, following trade negotiations between supermarkets and their agro-industrial suppliers.

“This context of inflation will remain over the next few months and will continue to have an impact on consumption”, suddenly affecting growth, estimated the ING economist.

INSEE expects France's gross domestic product (GDP) to grow by 0,2% in each of the first two quarters of 2023.

The growth of economic activity had slowed to 0,1% in the fourth quarter of 2022, already penalized by household consumption at half mast (-1,2%), according to the institute which confirmed on Tuesday a first estimate.

Benefiting in particular from the abolition of the contribution to public broadcasting and a slight increase in the average salary, their purchasing power has nevertheless increased thanks to an increase in gross disposable income (0,8% once the composition of households, according to the measure called "per consumption unit").

Against a background of inflation, households prefer to save, however, pushing the savings rate up to 17,8%.

Over the whole of 2022, growth had reached 2,6%.