Daniel Fortin, editor-in-chief at Les Echos, speaks every day in the 7am newspaper to enlighten you on THE economic fact of the day.
Today, he is interested in the influence of the increase in the price of fuel at the pump, on inflation in France for the year 2021.
Is the recent surge in oil prices going to kick-start inflation this year? Most economists fear that fuel prices are skyrocketing.
Yes 1.44 euros for diesel on average against 1.16 euros last year at the same time, 1.64 euros for unleaded 98, an increase of 22.3% over one year, it does It doesn't take much more for the fear of a slip to set in. Insee has already quantified the impact of the rebound in the barrel on the price index at 0.4 points, in May inflation had already reached 1.4%, half of which was due to petroleum products, in May. June, we had climbed to 1.5%, it is at this level that we should stabilize for the whole year even if it is quite likely that we will reach peaks of 2% increase this summer especially if oil continues to rise, today it has stabilized around 75 dollars.This is its highest level since 2019 and it is set to last as long as the OPEC countries do not agree to increase their level of production.
What will be the impact of this increase on households?
It will be especially hard for the most modest households which are bearing the brunt of the rise in diesel fuel, however even if the purchasing power of the French will be cut, should still increase on average this year simply because their gross income. available increases twice as fast as expected inflation, the increase in purchasing power would be 1.8% this year, this shows that the French finally came out of this crisis relatively unscathed by a virtuous double effect, of the State first, which "were" effective and the rapid recovery of the economy which boosted income from activity.
And then we must not forget that 44% of households managed to put money aside during the crisis.
Can we imagine that inflation will permanently re-establish itself in France?
This is a question that regularly divides economists and no one really has an answer, what we observe is an acceleration in prices after a very long period when they have remained almost stable, today activity So prices go up again, it's logical.
The tools of production did not completely return to normal after the crisis.
Will this last, it is not completely excluded because the States spend a lot of money to revive their economies, all these tens of billions of euros or dollars poured almost without counting could end up having an inflationary effect .