Millions of French households are being hit hard by the horrific cost-of-living crisis and price hikes sweeping across Europe and straining some of the continent’s biggest economies. But the situation worsened in France with inflation jumping again in July to 6.1% from 5.8% in June, according to the National Institute of Statistics and Economic Studies (INSEE), based in in Paris
The French national statistics office attributes this rise to “an acceleration in the prices of services in relation to the summer period, food and, to a lesser extent, manufactured goods”.
On an annual basis, food prices soared 6.7% compared to 5.8% in the previous month.
Prices for manufactured goods are rising 2.7 percent year-on-year from 2.5 percent previously, while prices for services rose 3.3 percent to 3.9 percent year-on-year.
But in a positive sign, the price of energy fell “thankfully” in July – now only 28.7% higher than a year earlier, compared with 33.1% in June.
This drop has been attributed to “oil product prices”, which have been falling progressively in France throughout this month.
Despite this, experts have warned that general daily prices are likely to continue to rise, at least for the next two months.
INSEE stated in its latest economic report at the end of June that prices are expected to continue rising to “just under seven percent in September” in year-on-year terms.
Inflation is then expected to stabilize, falling slightly to 5.5 percent this year, compared with just 1.6 percent in 2021, experts said.
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However, inflation in France remains much lower than that of some of the neighboring countries of the European Union, according to the latest Eurostat figures.
Belgium has seen inflation rise to 10.5% in comparable annual terms, with 10% in Spain, 8.7% in Austria, 8.5% in Italy and 8.2% in Germany.
There is now also particular concern for Germany, home to the EU’s biggest economy, which is bracing for chronic gas shortages heading into the winter months amid fears that Russia could completely cut off supplies to through the Nord Stream 1 gas pipeline.
Overall, the eurozone economy grew much faster than expected in the second quarter of this year, but economists continued to warn of the possibility of a mild recession driven by ever-higher inflation. and supply chain issues in the second half of this year.
Eurozone GDP rose 0.7% quarter-on-quarter in the April-June period, with a 4.0% year-on-year gain, beating expectations for a 0.2% quarter-on-quarter gain and 3.4% annual
Inflation in the 19 countries that share the euro rose to 8.9% in July from 8.6% the month before.
ING economist Bert Colijn warned Europeans to expect a “mild recession from the second half of the year”.
He said: “The acceleration in economic growth is mainly due to the effects of reopening and underlying weakness due to high inflation and manufacturing problems.
“From there, we expect GDP to continue on a downward trend as the pick-up in the reopening of services moderates, global demand softens and the squeeze on purchasing power persists.
“We expect this to translate into a mild recession from the second half of the year.”
Additional reporting by Maria Ortega.