January 29, 2022

INSEE anticipates a drop in purchasing power in France in the first half of 2022

It is the note which falls badly. While, since the start of the coronavirus crisis, the “whatever-it-costs” policy has saved the economic fabric from a dreaded disaster and preserved the purchasing power of households, inflation could darken the economic record of the executive, a few months before the presidential election. INSEE, which publishes its economic report for the fourth quarter on Tuesday, December 14, predicts that purchasing power, up 1.8% in 2021, will decline by 0.5% over the first half 2022, due to higher prices. A landing in pain, while this subject is highly sensitive. « [C’]is the element which will count the most in the vote of the French “, says Bernard Sananès, president of the Elabe polling institute.

This decline could be felt all the more badly since it will occur against a backdrop of a slowing recovery. The growth of the French gross domestic product (GDP), of 0.5% in the fourth quarter, as expected, will reach 6.7% over the whole of 2021. Assuming the – fragile – assumption that health restrictions will not end. will not harden any further, the economy will continue to rebound at a rate of 0.4% in the first quarter of 2022 and 0.5% in the second. A tempo which makes it possible to fix the growth overhang – which is definitely stored up, even if activity remains sluggish for the rest of the year – at 3.0% at the end of the first half, according to the forecasts of the ‘Insee.

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This slowdown is partly explained by the persistence of supply difficulties, which remain at an unprecedented level and which strongly penalize activity in industry. In the automobile industry, at the end of the year, production was at a level 25% to 30% lower than before the crisis. It is difficult to hope for a rapid return to normal in a context of heightened uncertainties at the international level; the new border restrictions will further slow down the recovery in sectors such as tourism and hotels and restaurants. A worrying signal came from China on Tuesday: in the industrial region of Zhejiang, in the east of the country, several large companies had to suspend production, in order to limit Covid-19 contamination.

Increase in the energy bill

But the main downside remains inflation, the very one that threatens to eat away at the purchasing power of households. INSEE has examined in detail the increase in the energy bill of the French over 2021. The result is clear: the bill for gas, electricity and fuel has increased by 30 euros, on average, per month, compared to at the end of 2019. Gas, which soared by more than 40% between December 2020 and October, alone accounts for half of this additional cost; fuel represents 8 euros more per month, a figure even higher in rural areas, and electricity plays a role for the rest.

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