• In August, inflation was 1.9% in France according to INSEE.

  • A figure up from July, itself up from June… If regulated inflation is a good thing, endless runaway is starting to worry.

  • Do not panic according to economist Stéphanie Villers, things should naturally return to order.

Inflation continues to rise in France, with a rise in consumer prices of + 1.9% over one year, against 1.2% in July, according to the provisional estimate published by INSEE.

A price increase that is certainly moderate, but continues over several weeks, enough to already give some economists a cold sweat, fearing an unmanageable runaway.

But for Stéphanie Villers, a specialist in macroeconomics, this inflation is only transitory and the economy should quickly regain equilibrium.

Should we be afraid of this inflation?

With 1.9% inflation for the month of August, much lower than the United States (+ 5%), France is experiencing a reasonable inflation situation.

But what worries is that this inflation is increasing every month.

Are we again entering an inflationary sphere with a galloping rise in prices?

The debate divides economists, but in my opinion, we are in transitory inflation.

There is therefore no need to worry, inflation should quickly stop or in any case stop increasing.

What would suggest that this inflation would only be transitory?

We know the causes of this inflation and its causes should either stop or not spread.

According to INSEE, in August, it is the energy pole that largely explains this inflationary surge.

Why are energy prices rising?

Because there is a massive and sudden resumption of activity at the global level and a shortage of these raw materials, more accustomed to meeting such a demand.

These materials are also found in less developed areas, also affected by the coronavirus pandemic.

There are therefore currently bottlenecks in the production chains but which should disappear in the coming weeks.

The second reason mentioned by INSEE is the difficulty of recruiting labor in France.

To recruit despite these difficulties, companies increase wages, but if companies increase wages, this is reflected in the final price of the product.

However, these hiring problems only concern one sector of work in particular, the so-called arduous trades, such as construction, catering, hotels, etc. ... However, there is no reason why this increase wages in this specific sector leads to an overall increase in wages, and therefore an overall increase in prices.

On the contrary, other business sectors have no difficulty in recruiting.

Can inflation be good?

Inflation is like cholesterol: there is good and bad.

Too galloping inflation is bound to be bad because it pushes the central bank to raise interest rates, nipping growth in the bud.

On the contrary, inflation "under control" and taking place for good reasons is above all a sign of growth, vital growth for our country, and predictable growth with the reopening of all sectors.

The interest now is that it stops at a point, but as said, this is the expected scenario, especially with the end of whatever costs and state aid, the demand should also dry up, leaving all the more time for the supply to get back on its feet.

So we're probably just seeing good economic growth, rather than worrying inflation.


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