Two good news, and one bad. According to the latest figures from INSEE, published this Friday, September 27, inflation slowed significantly this month, and household consumption increased. Public debt, on the other hand, increased further, reaching 112% of GDP at the end of the second quarter. L’Express takes stock.
Inflation slowed significantly in September
Prices increased by 1.2% year-on-year in France in September, a sharp decline compared to inflation of 1.8% recorded in August, indicated this Friday INSEE in a first estimate. This slowdown in inflation is explained both by the slowdown in the rise in prices of services (2.5% year-on-year in September after 3% in August) and the decrease in energy prices (-3 .3%) and manufactured products (-0.3%), details the National Institute of Statistics and Economic Studies. The cost of food products (+ 0.5% over one year) and tobacco (+ 8.7%) has evolved at the same rate as in August, according to this provisional estimate which will have to be confirmed mid -october.
The consumer price index (CPI) therefore remains for the second month in a row below the European Central Bank’s inflation target, set at 2%. A benchmark indicator at European level, the harmonized consumer price index (HICP) also fell below the symbolic 2% mark, to 1.5% over one year in September compared to 2.2% in August.
Over one month, the consumer price index fell by 1.2% in September. This is “the strongest monthly drop in prices since the start of the series (statistics, Editor’s note) in 1990”, underlines INSEE. “To the seasonal effect of the drop in the price of transport (notably air) and accommodation services, we must add in particular the marked drop in energy prices, the return to normal of certain prices after the Games Olympic and Paralympic Games and the fall in the price of health services”, list the national statisticians. “Conversely, the prices of manufactured products would increase over one month, driven by the increase in the prices of clothing and shoes,” adds INSEE. In its latest economic report, published at the beginning of September, INSEE forecast that the consumer price index would reach 1.6% over one year in December 2024.
Household consumption on the rise
Household consumption of goods increased by 0.2% over one month in August, at the same rate as in July, driven in particular by an increase in food consumption, also indicated this Friday INSEE. Food consumption (37% of total spending on goods), which had suffered from high inflation which has now subsided, accelerated in August, increasing by 0.8% after an increase of 0.2% in July. It benefited from an “increase in purchases in almost all areas of consumption of agri-food products”, detailed the National Institute of Statistics in a press release. Energy consumption, which accounts for 20% of household spending on goods, slowed down (+0.2% after +0.9%) due to lower fuel consumption and spending on electricity and gas in drop.
Following an opposite trend, consumption of manufactured goods (43% of expenditure) continued to decline (-0.4% after -0.3%), the rebound in expenditure on clothing not having fully offset the sharp decline “expenditure on durable goods such as transport equipment and housing equipment (electronic products, furniture, household appliances, etc.).
In July, household consumption of goods also increased by 0.2%, revised down by 0.1 point on Friday by INSEE.
Public debt continues to rise
France’s public debt, for its part, continued to swell at the end of June, flirting with 3,230 billion euros at 112% of GDP, a new indication of the sharp deterioration of public finances two weeks before the presentation of a high-risk 2025 budget project for the government. The country’s public debt, which increased massively with spending during the health crisis, increased by 68.9 billion euros in the second quarter to reach 3,228.4 billion euros. This represents 112% of gross domestic product, an increase compared to the end of March (110.5% of GDP or 3,159.5 billion). The debt increased by 175.2 billion euros in one year and by 842.3 billion euros since the end of 2019, when it still weighed less than 100% of GDP, before the Covid crisis.
The increase recorded in the second quarter comes mainly from the increase in State debt (+69.9 billion euros). The debt of social security administrations also increased, by 4 billion euros. On the other hand, the debt of various central administration bodies contracted by 4.7 billion euros, and that of local public administrations by 0.3 billion euros.
The new government of Prime Minister Michel Barnier has committed to presenting during “the week of October 9” its draft budget for 2025, which will mainly be placed under the sign of cuts in public spending in an attempt to consolidate public finances. strongly degraded. An increase in taxation, targeted at the wealthiest and large businesses, is also envisaged.
After falling to 5.5% of GDP in 2023, France’s public deficit will experience a further slippage in 2024 and risks exceeding 6% of GDP, warned the Minister of the Budget, Laurent Saint-Martin. This is much worse than the deficit of 5.1% of GDP on which the previous government was counting and well above the threshold of 3% set by the European Union. Having become one of the worst performers in the euro zone, France saw its sovereign rating downgraded by the S&P Global Ratings rating agency at the end of May and is the subject of a procedure for excessive public deficits by the Commission. European.