we explain to you why the drop in prices is not necessarily good news for consumption

Prices increased by 1.2% year-on-year in France in September, reports INSEE in a first estimate(New window) published Friday September 27. This is a retur at the lowest level of 2021. Franceinfo explains to you why this is good news and bad news at the same time.

This decline in inflation allows food shopping, and all agri-food products more generally, to start to rise again. Indeed, last month was marked by an additional point of consumption, which proves that consumers are finally loosening their belts. The consequence of price stabilization, while in times of inflation we could see price increases of up to 16%.

On the other hand, the French are reluctant to buy other consumer goods, in particular durable goods for which we observed a drop of 0.5% in July. The trend is also downward for purchases of cars, household equipment, household appliances, computers, and even furniture, with a point and a half less.

Faced with this trend, prices fell by 0.3% this month, a slight and imperceptible decline for the consumer. But experts are worried because such low inflation is a sign of sluggish economic activity and faltering consumption, which could be bad news for the country’s economy. The worst would be deflation, i.e. a sharp drop in prices. This is what experts are watching carefully because the right figure for inflation, the equivalent of 37°C for the human body, is around 2%. Not more, but not less.