Inflation is falling again. Revised upwards in May to 2.3%, the increase in consumer prices fell to 2.1% year-on-year in June, according to provisional figures published this Friday morning by INSEE. In detail, food prices continue to slow down (+0.8% over one year). Those of manufactured goods are immobile. The largest increase concerns energy, whose prices increased by 4.8% this month. For their part, services showed an increase of 2.8% over one year like the previous month. Measured by the harmonized European HICP index, inflation reached 2.5% in June over one year.
The good news is that from one month to the next, prices are barely moving (+0.1% in June). The decline has therefore continued since the peak of 6.3% in February 2023. It is even significantly faster than what INSEE predicted last March. In its economic report, the statistics institute was indeed counting on inflation of around 2.6% at the end of the first half of 2024.
Consumption on the rise
The battle against inflation is therefore about to be won. Should we see this as the effect of the first gains in purchasing power, while salaries are now increasing faster than price tags? Household consumption in any case rebounded by 1.5% in May, after having fallen by 0.9% in April. In particular, food spending increased by 2.4%, as did spending on energy (+3.9%). On the other hand, purchases of manufactured goods decreased slightly.
The possible arrival of a new government majority after the dissolution announced on the evening of June 9 could nevertheless influence the trajectory of inflation in the coming months. For Philippe Waechter, the programs of the two opposition blocs could lead to a small increase in inflation because they are based on a demand shock, which will cause tensions on production and on wages, he predicts.
