The end of inflation? Retail prices mark a turning point in May!

The end of inflation? Retail prices mark a turning point in May!
The end of inflation? Retail prices mark a turning point in May!
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The end of inflation? Retail prices mark a turning point in May!

Unexpected news has fallen for French consumers and their budgets: prices in supermarkets recorded a drop over one year in May (-0.1%), a first in 30 months. This deflation marks a turning point after a long period of inflation, according to a recent study by Circana relayed by BFM Business.

A trend of falling prices

After more than two years of continuous price increases in mass distribution, the month of May 2024 marks a new era with annual deflation of 0.1%. This reversal of trend follows food inflation which had slowed sharply to 0.5% in April, a considerable drop compared to the 16% recorded in May of the previous year. Consumers, although not yet fully aware of these reductions, can expect a gradual improvement in their purchasing power.

Marked decline in certain categories

The price reductions, although generally modest, are particularly notable in certain product categories. In the hygiene sector, a 2.4% price reduction was observed by Circana. Men’s care showed a significant drop of 8.7%, followed by shower gels (-5.5%) and intimate toiletries (-4.6%). Fresh non-dairy and frozen food products also saw a decline, with prices falling by 0.9% and 0.4% respectively. For example, the price of poultry ham fell by 5.8% and frozen desserts and pastas by 4.2%.

A context of negotiations and competition

This deflation over one year was expected due to the monthly price falls measured since last September. The month of May 2024 thus marks the ninth consecutive month of declines, although their intensity has decreased over time. In September 2023, the monthly drop was 0.6%, while it was only 0.2% in May 2024, which does not have a spectacular impact on the shelves.

Despite this downward trend, inflation over two years remains high with retail prices 15.9% highest in May 2024 compared to May 2022. However, this deflation is a pleasant surprise, especially since the trade negotiations concluded last January resulted in slight tariff increases. Competitive pressure between distributors, accentuated by a drop in purchasing volumes (-2.4% in 2024), has pushed stores to reduce their margins to attract customers.

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