“Today, we have inflation of around 5%. I remind you that this is the lowest of all the countries in the euro zone”, said Bruno Le Maire, Wednesday June 1 on France Inter. While the general increase in prices weighs on the purchasing power of the French, the Minister of Economy defended the measures put in place by the government to limit inflation.
.@BrunoLeMaire : “We are at a peak of inflation: I said several months ago that the toughest part was ahead of us, the toughest we are there, and I prefer to be clear, it will last several more months, the inflation will last.” #le79Inter pic.twitter.com/sWpRWJbkiN
– France Inter (@franceinter) June 1, 2022
“We took very strong measures with the President of the Republic – the first in Europe. We anticipated this inflationary peak by taking measures to cap energy prices”, argued the boss of Bercy. Have these provisions – the freezing of the price of gas and electricity, the discount of 15 cents on a liter of petrol at the pump – enabled the government to maintain the purchasing power of the French? Franceinfo plunged into the small lines of the inflation figures.
According to INSEE data, France, with 5.2% inflation, is indeed the country in the euro zone where inflation is the lowest. Nevertheless, for the fairest possible comparison, a common indicator is necessary, with the same calculation method for all countries. Christophe Blot, Deputy Director of the Analysis and Forecasting Department of the French Observatory of Economic Conditions (OFCE), therefore invites preference to be given to Eurostat figures, of which “the index is harmonized for all countries in the euro zone”.
This changes things slightly. France remains very well placed on the podium of the countries of the euro zone where inflation is the lowest, according to Eurostat data, but it does not display the lowest inflation. With 5.8% generalized price inflation between May 2021 and 2022, France comes second, just behind Malta and its 5.6% inflation.
Inflation had not been so high in France since 1985. However, it remains below the average inflation within the euro zone: 8.1%. It is also much lower than that observed in other countries of the euro zone, in particular the Baltic countries. Estonia (20.1%), Lithuania (18.5%) and Latvia (16.4%), bordering Russia, are bearing the brunt of the price increase.
Why are these countries more affected than France? For Christophe Blot, “This is explained by the weight of energy in the consumption of Eastern European countries, which is greater than in France”. “Inflation is strongly driven by the rise in energy prices, so mechanically inflation is higher.” The difference observed from one country to another in the euro zone can therefore also be explained by the measures taken by the various governments to contain the general increase in prices. “If we limit the price of energy, we limit inflation”summarizes Christophe Blot.
Between May 2021 and 2022, energy prices increased by 26.8% in France, according to Eurostat, well below the average in the euro zone: 39.2%. Some States pull this average upwards. In the Netherlands, the price of energy increased by 67.3% between May 2021 and 2022. In Belgium, energy increased by 65.5% year-on-year.
This high inflation in energy prices feeds general inflation. Céline Antonin, economist in the analysis and forecasting department of the OFCE, explains this mechanism: “In France, in the first quarter of 2022, we had a contribution from energy products to inflation of 2.6 points out of 5. That is to say that half of inflation in France is linked to the energy component. In Germany, energy contributed 4 points to inflation. In Spain, 6.4 inflation points are attributable to energy.”
If inflation is lower in France than in Germany, this does not mean that the purchasing power of the Germans has fallen more than that of the French. To estimate the loss of purchasing power, wages must also be considered. “If prices increase faster than wages, you have a loss of purchasing power”summarizes Céline Antonin.
Indeed, if your salary has not increased for a year, inflation corresponds to your loss of purchasing power. When your income has increased, then inflation has not weighed on your purchasing power as much. “In France, the loss of purchasing power is slightly greater than in Germany, but remains comparable, around 2%. The difference is that France has lower inflation than Germany, but a low wage increase; whereas Germany has higher inflation, but also higher wage increase”, comments the economist. According to Dares, the index of the basic monthly salary of all French employees increased by 2.3% over the year. In Germany, the nominal wage increased by 4% between the first half of 2021 and 2022, according to the Statistisches Bundesamt (in English)the German Federal Statistical Institute.