Ended Netflix subscription, fewer hairdressers and more private labels: how households are coping with inflation

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published on Sunday June 12, 2022 at 07:00

To deal with inflation, some households face daily compromises in an attempt to balance their budget, and spending inevitably skyrockets.

In May, inflation accelerated even more, surpassing the 5% mark for the first time since 1985 and, “unlike in the 1970s and 1980s, many consumers are not used to this phenomenon,” says Jérémy Ducros, an economist at the association of general interest La Finance pour for us.

Another specificity according to him: “We don’t know how long it will last” and “there is a great heterogeneity, for example between energy prices that skyrocket and food prices that increase, but less quickly.”

To deal with inflation, some households face daily compromises in an attempt to balance their budget, and spending inevitably skyrockets.

Less pleasure shopping for the middle classes

For the middle classes, whose part of the budget dedicated to restricted expenses (food, rent, energy, daily commutes, etc.) is lower than that of the most precarious, the first arbitrations are made in non-essential poles. “There is a greater decrease in hygiene/aesthetics, such as hairdressers and beauticians, and we are running out of toothpaste tubes,” observes Sandra Hoibian, general director of the Research Center for the study and observation of living conditions (Credoc).

Trips related to leisure, vacations, restaurants, furniture: in the face of uncertainty, “we cut back on pleasure purchases and, in households that had already saved during the (Covid) health crisis, we promoted precautionary savings,” he adds.

If consumers are no longer used to periods of inflation, the Covid lockdowns have established new habits, which translates into maintaining low levels of spending on clothing/hygiene/beauty or cultural outings.

And, as a novelty in the face of inflation, some digital subscriptions taken during the crisis could be cancelled.

Netflix cites inflation as one of the factors that affected its subscriptions in the first quarter. According to a recent study by the Nielsen Institute, 44% of French households now paying attention to their expenses have limited their “leisure at home” budget.

Private label and acclaimed first prizes, abandoned organic

The first reflex to have when budgets are weighed down by inflation according to La finance pour tous, “take out three account statements” and look for duplicates, for example in insurance, to order.

But in essential expenses it is impossible to give up, especially for the most precarious who must look for alternatives. On food goods (consumption falls 1.1% in April according to INSEE), the switch to private label or even first price is a reflectionCurrently, 25% of vulnerable households use them, although their prices increase proportionally more, according to the Nielsen Institute.

The postponement is today all the easier as discount distributors such as Lidl or Aldi have improved their image: “they talk about the quality of fresh products, they have renovated their stores, launched loyalty programs and continue to be attractive with promotional programs for household appliances” , according to Nicolas Léger, chief analytical officer at Nielsen.

More recent phenomenon, the abandonment of organics (sales fall 6.3% since the beginning of the year) whose price, according to him, has always been a “barrier” to consumption, reinforced in an inflationary context.

Going green doesn’t always lower energy bills

In energy, whose consumption picked up in April due to temperatures, the room for maneuver is limited. On a national scale, lowering the heating a few degrees reduces the bill but, on a domestic scale, the price increase quickly compensates for the savings made.

“Certain ecological gestures that also reduce costs are not within everyone’s reach”, points out Jérémy Ducros, despite the subsidies to change the means of boiler or car. The same goes for fuel: “We can slow down, but we will always have to refuel.”

On these latest budget items, the Government is launching targeted aid (compensation for inflation, tariff shield, discount at the pump), but “the elephant that will arrive in the room” with no room for manoeuvre, according to Sandra Hoibian, is housing , “which has been increasing for 20 years and will not escape inflation in the coming months.”

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