For years, our leaders have ensured that prices do not increase. Barely 1.4% in 2019. And yet, the feeling of the French is very different. It must be said that a capital element, essential even, is not taken into account in the calculation of prices: real estate. And yet, in 20 years, real estate prices have doubled, even tripled in big cities. Or an increase of more than 200%. This is called galloping inflation.
INSEE does not take real estate into account in the price index, because it calculates the "consumer" price index. It's all about definition. Buying an apartment is not part of consumption. We do not consume an apartment, it is an investment that retains its value, and that its owner can pass on to his children.
>> Find all of Axel de Tarlé's economic chronicles in replay and podcast here
Towards a change in calculation rules
INSEE simply takes rents into account when calculating the price index. And even if they increase, they only weigh for 6% in this index. And yet, housing has become one of the first subjects of concern for the French. It absorbs more than 25% of the household budget. This question is moreover at the heart of municipal elections.
The European Central Bank wants to change this rule. "We have to take real estate more into account when calculating prices," said its chief economist in the columns of the Financial Times . Inflation would automatically be revalued by this change, with many positive consequences, since pensions, the minimum wage and interest rates are revalued according to inflation. It must be said that to ignore real estate, when we talk about the household budget, is to refuse to see the elephant in the middle of the room!