Purchasing power: inflation falls below 2% in France, a first in three years

Orange juice soars

Consumer prices remain above 2% (2.2%) and increased again in August (+0.6%). Those of food are now evolving globally in a more reasonable manner (0.5% over one year against 11.2% a year ago), after the surge linked to the war in Ukraine, but remain at a high level, with strong disparities observed on the shelves.

While the price of orange juice has soared by an average of 25% over a year due to a drop in production (bad weather linked to global warming, drought), olive oil, also at its highest (+20% over a year), should, on the contrary, become more accessible again thanks to better harvests.

But, in general, food prices increased again in August, as did clothing and shoes due to the end of the summer sales.

Des price increases felt during this back-to-school period

Enough to further increase the budget of the French during this back-to-school period. 79% of parents have noticed, at the same time, price increases since last year on expenses related to their children, according to a CSA Research-Cofidis study, relayed by La Dépêche.

The time has come for the “D” system in many families who are scaling back their savings to limit purchases or turning to the second-hand market.

What to expect from now on? Barring a major geopolitical event, “disinflation should continue next year, thanks to the plausible drop in the price of electricity (between − 10% and − 15% in February 2025) compared to an increase of almost 10% in February 2024", explains Stéphane Colliac, economist at BNP-Paribas, quoted by Le Monde.

“In February 2025, inflation would be only 1% year-on-year”, he anticipates. But the mass retailers and the experts agree on one point: if prices increase less now, they will probably never return to their pre-crisis level.

Salaries are increasing less this year

Bad news for employees: at a time when inflation in France is falling below 2%, their remuneration is increasing less than last year. This is the main lesson of a study published on Friday by the Deloitte firm, which analyzed more than a million individual data from more than 300 companies: the average level of these increases is 3.5% in 2024 for workers, employees, technicians and supervisors (Oetam), while it was 4.6% last year. Executive salaries are increasing in almost the same proportions (3.4%). Regardless of the category, salary increases remain, in any case, higher than the level of inflation. Which means that the French who were able to benefit from it (the phenomenon is far from general) have gained purchasing power. Even within the same company, the Deloitte firm notes, moreover, in Le Figaro, “a strong recourse to ’individualization" of salary increases, particularly among executives, but also increasingly for other employees. In this context, bonuses or variable shares are all the rage, unlike the value-sharing bonus, which has become less attractive since it is no longer tax-free. Another trend noted by the study: the average gender pay gap, to the detriment of women, has returned this year to its 2022 level, at 3.8%, compared to 2.6% last year.