Inflation in France has reached its lowest level in several years. According to provisional figures published by INSEE, price increases fell to 1.2% in September, compared to 1.8% in August, and 3.1% last January. This downward trend, although beneficial for households who have suffered from rising prices for two years, will have negative repercussions on regulated savings accounts.
The Popular Savings Booklet (LEP), whose rate is directly indexed to inflation, could suffer a drastic drop during the next revision, scheduled for February 1, 2025. In fact, the calculation of the LEP’s return is based on the average inflation over the previous six months. For the period from July to September, average inflation is 1.7%. If this trend continues, the LEP rate could increase from the current 4% to around 1.7%.
Fortunately, such a severe drop could be slowed down by the rule guaranteeing that the LEP rate must remain 0.5% higher than that of the Livret A. In addition, government support could moderate this fall. During the last revisions, the LEP rate had been maintained at a level higher than that calculated, notably in February 2024, when it was kept at 5%, despite falling inflation.
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