The decline in household consumption is notably even more marked than previously estimated by the National Institute of Statistics, with household purchasing power having fallen "significantly" by 1.9% in the first quarter, weighed down by inflation.

After its rebound in 2021, with growth of 6.8% (also revised downwards on Tuesday by INSEE), the French economy therefore relapsed at the start of 2022, penalized both by the Omicron variant and by the repercussions of the war in Ukraine, the main one being soaring prices.

Inflation accelerated further in May to 5.2%, after reaching 4.8% in April, exceeding the 5% mark for the first time since September 1985.

Now, the growth overhang at the end of the first quarter (i.e. the growth that we would obtain in 2022 if the economy stagnated for the rest of the year) is only 1.9 %, against 2.4% estimated so far by INSEE.

At this stage, INSEE expects growth of 0.25% in the second quarter, and the Banque de France of 0.2%.

While household consumption is traditionally the engine of French growth, it was clearly struggling in the first quarter (-1.5%, against -1.3% estimated previously) with households showing their concern about the inflation.

GDP of France AFP

In the first quarter, their purchasing power thus contracted by 1.9%, more than the -1.5% forecast by INSEE, even if this drop partly reflects the effect of comparison of the payment of the "inflation allowance" recognized in the fourth quarter of 2021.

The new government has put the subject at the top of the pile of its priorities, but the measures promised (food vouchers, reindexing of pensions and social minima, etc.) will have to wait for the result of the June legislative elections and the constitution of a new National Assembly to ratify them.

If employment and wages continued to grow in the first quarter, the pace slowed down compared to the last quarter of last year, also notes INSEE, which underlines that the number of hours worked fell by 0 .3%, a consequence of sick leave linked to the Covid-19 epidemic.

© 2022 AFP