In France, without stagflation, but with “modest growth”

Inflation running its course, reaching 5.5% year-on-year in May-June, and growth of around 0.5% in the second quarter: INSEE analysts still do not want to talk about stagflation, since the zero growth registered in the first trimester could lead one to fear. “Our scenario is rather one of modest growth”, said Julien Pouget, director of the economics department, on Monday, May 9. Stagflation is characterized by a “high inflation and lasting stagnant activity”he remembered.

Christine Lagarde, the president of the ECB, also assured, on Saturday May 7, that this phenomenon, feared by economists, has not yet occurred. ” our reference “ in the euro area. “Although the unusual degree of uncertainty could mean a combined slowdown in growth and high inflation, the current situation cannot be compared to that of the 1970s”explained in an interview with the Slovenian newspaper give it.

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Stagflation or not, this first half of the year is, in any case, synonymous with a loss of purchasing power for the French: the gross disposable income of households, calculated per unit of consumption (that is, taking into account the size of the household) , fell 1.5%. in the first quarter of 2022 vs. the fourth quarter of 2021. In the second quarter it is expected to be down another 0.5% vs. the first three months of the year. The sharp drop in the first quarter is, in fact, partly explained by the fact that the compensation for inflation was paid to the beneficiaries at the end of December: by slightly inflating income at the end of the year, it accentuates the drop in purchasing power in the following quarter.

This fall would have been even more pronounced without the measures put in place to limit the impact of inflation on the household budget, assures the INSEE: the “rate shield” on energy and gas prices, as well as the discount at the pump have reduced inflation in France by two points since the beginning of the year. Without these measures, “Inflation would exceed 7%”, estimates the Institute of Statistics. But this impact is likely to be less in the coming weeks, because the price rise, initially concentrated in energy prices, is increasingly spreading to other consumer items, and especially food.

“The consumption of households as a whole could be boosted by a recovery effect of services” Julien Pouget, director of the INSEE economic situation department

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