The “tariff shield” has halved the impact of soaring energy prices

Europe 1 with AFP 5:38 p.m., September 01, 2022

The "tariff shield" measures taken by the government to contain household and business bills in France have helped to halve the effect of soaring energy prices on inflation, according to a study by the 'Insee published on Thursday.

Between the second quarter of 2021 and the second quarter of 2022, the period covered by the study, "the rise in energy prices (gas, electricity and petroleum products) contributed to 3.1 inflation points out of a total of 5 .3%", according to INSEE, which asserts that the tariff shield measures "have reduced these effects by half".

Without these measures, "inflation between the second quarters of 2021 and 2022 would have been 3.1 points higher", estimates the National Institute of Statistics.

"Two-thirds of this effect reflects the higher cost of energy consumed by households themselves for travel and heating. The remaining third comes from the repercussions, in the prices of other products, of increases in the cost of energy for businesses," says the study.

An effective shield on the most modest and elderly households

Government measures are mitigating "particularly inflation for the poorest and oldest households", according to INSEE, which points out that households with the lowest incomes are on the front line in the face of the energy surge, taking into account a share of transport and housing expenses "a little higher in their consumption basket".

Energy expenditure represents 12.7% of consumption expenditure for the 10% of households with the lowest incomes, compared to 9.5% for the 10% of households with the highest incomes, the study indicates.

Among the measures taken by the government, the freezing of regulated gas prices at their October 2021 level, "has avoided a 47% increase in regulated prices between October 2021 and June 2022", underlines INSEE, which also mentions capping the increase in regulated electricity sale tariffs, which were increased by 4% including tax between August 2021 and February 2022, and have since been stabilized.

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Overall, "between the second quarters of 2021 and 2022, by combining the increase in the price of electricity, gas and petroleum products, energy prices thus increased by 28% for households", an increase which "would have been two times higher without shield measurement (+54%)", according to INSEE.

Finally, for companies, which depend more than households on electricity, "energy is more expensive by 20%, against 50% without a shield", over this period.