WHY FRANCE IS LESS AFFECTED BY INFLATION

THAN OTHER EUROPEAN COUNTRIES

For the rest, it is mainly the countries of Eastern Europe that are suffering from the sharp rise in prices. The rest of Europe is not spared either. In the Netherlands, for example, the rise in prices exceeds 13% over one year. The Dutch government has taken fewer measures than other European executives to support household purchasing power and fight inflation. Still according to Eurostat data for the same period, it is 8.8% in Germany, 10.3% in Spain, 9% in Italy. In Great Britain this rate was 10.1% in July.

At the other end of the spectrum, France and Malta are doing the best. In particular, Malta has still not raised state-regulated energy prices, thus artificially keeping inflation at zero in this area... "Everyone should have around 9% inflation normally, but France is an exception”, observes Éric Heyer, economist and director of the analysis and forecasting department of the OFCE. With an annual inflation rate of 6.7% in August, can we say that France is doing well compared to its German, Spanish, Italian or British neighbors ?

The tariff shield

If inflation is lower in France, "it's partly thanks to our energy mix", explains Éric Heyer. Continuing to bet on nuclear allows us in particular to be more independent than our German neighbor who imports a lot more fossil fuels. According to figures from the International Energy Agency, Russian oil accounted for only 17% of black gold imports from France in 2019, compared to 34% for Germany.

The other reason and “the most important”, according to Éric Heyer, are “the measures to support households, either with checks or by freezing prices”. Germany, Great Britain and Spain have preferred, by political choice, financial assistance to citizens by distributing vouchers and discounts on fuel, without freezing prices. France preferred to bet big on the tariff shield by freezing gas prices until the end of 2022.. “If there was no such protection, the electricity bill would increase in January 2023 by 120 euros per month and the gas bill of 180 euros per month”.

In line with remarks made this weekend by the Minister of Public Accounts Gabriel Attal, Bruno Le Maire confirmed that all French people would continue to benefit in 2023 from an attenuated form of "tariff shield" on gas prices and electricity.

The surge in energy prices should therefore be contained and limited at least until the beginning of 2023 for the French.

At the start of 2023, "there will be an increase for everyone in the price of gas and electricity, which will be as contained as possible, to the extent that our public finances allow us", guaranteed the Minister of Economy. Since the fall of 2021, the "tariff shield" and government rebates on the price of fuel have cost 24 billion euros, according to a recent figure from Bercy, but the specter of yellow vests helping...

The limits of the tariff shield

And yet for Jean-Marc Daniel, the tariff shield "is an artificial modification of prices, which, in the end will be just a transfer for future generations". They make it possible to limit inflation “in a limited time” but “the creation of a budget deficit cannot last forever”. And it is obvious for all the specialists, “inflation will rise again when we lift these tariff shields”.

If the State is coping with the crisis with the means at hand and succeeds in limiting the effects of the drop in purchasing power, it is at the cost of a debt which is accumulating and which we will have to absorb one day or another.