“When I look at myself, I feel sorry. When I compare myself, I console myself. “ Talleyrand’s maxim is a good illustration of the inflation situation in France. With a rise in prices over the last twelve months, calculated at 2.8% by INSEE, inflation has reached a level not seen for more than a decade. However, this outbreak remains more measured than that recorded in neighboring countries.
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Figures harmonized at European level indeed show that while all countries are affected, some suffer much more than others. With the calculation method used by Eurostat (which is used for international comparisons), France shows inflation over twelve months of 3.4%. It’s a lot. But it is also half as much as Belgium (7.1%), clearly better than Germany (6%) or Spain (5.6%).
This disparity may be surprising when soaring energy prices affect all countries. But it is easily explained, assures Julien Pouget, head of the business cycle department of INSEE: “Part of the gap comes from energy. The energy mix is different from one country to another and certain pricing systems, for example regulated tariffs, can end up delaying the rise in prices for households. “
In industry, production prices are skyrocketing
Alongside this major effect, there are also differences related to what statisticians call the “base effect”, in other words, the starting level. Germany, for example, had temporarily lowered its VAT in 2020, thus lowering prices. The end of the measure, since the beginning of the year, signals the return to normal and mechanically boosts inflation.
All these nuances lead to lower inflation in France compared to many other countries. But this is by no means a guarantee for the future. “The government’s measures to curb the cost of energy and the efforts of large retailers are making it possible for the moment to limit price increases. We also see that companies contain the increase by cutting their margins or putting pressure on their subcontractors. All this will obviously only have a time, warns Christopher Dembik, economist at Saxo Bank.
The INSEE statistics, indeed, show that production prices in industry have soared, rising by 14% in one year. “At this point, it hasn’t yet passed through much into consumer prices, but it’s expected to happen gradually,” notes Julien Pouget. What to feed in the coming months “a phenomenon of communicating vessels. Inflation linked to the cost of energy could fall while that of manufactured goods would take a greater share”.
“Concerns for the future”
Already, the discourse of many economic players is beginning to change. And not only in the United States, where the head of the central bank questions the idea of an inflationary push only “transient”. In Europe too, many see inflation on the right track to take hold more permanently. With progressive repercussions on all prices starting with those most visible to consumers, those on the shelves of supermarkets.
Certainly, prices have not soared in recent months in supermarkets. According to the IRI Institute, which peels receipts, consumer products posted an increase of barely 0.04% last month. This is little. But this nevertheless marks a break with the continuous trend of erosion of recent years.
On the shelves, some labels have thus begun their waltz. Over one year, the price of frozen desserts rose by more than 4%, followed by pasta (3.8%) and cheese (3%). For the moment, these increases mainly affect private labels. For the major brands, this will be decided after the annual negotiations which will end at the end of February. But already the bosses of the big brands no longer rule out seeing prices rise. “There are concerns for the future”, recently recognized Alexandre Bompard, the CEO of Carrefour.
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While many indicators are turning orange, the magnitude and duration of the inflationary rebound still remain unpredictable. “Many factors will come into play, linked to the price of a barrel of oil, to the world economic situation but also to the evolution of the epidemic”, notes Christopher Dembik. So many unknowns that encourage economists not to issue definitive opinions. As Talleyrand once again said, taking up a quote from Lao-tzu: “Those who speak do not know, those who know do not speak. “
All countries are concerned
The latest figures from the OECD, published on Thursday 2 December, show that the resurgence of inflation has now become widespread in the developed countries. On average, the increase in prices over the last twelve months reached 5.2%. “The highest rate since February 1997”, notes the organization. However, the inflationary surge remains less in Europe than in the United States, “where year-on-year inflation has risen sharply” and now reaches “the highest rate since November 1990”.