A series of indicators published Wednesday by the National Institute of Statistics (INSEE) paints a half-fig half-grape picture of the French economic situation, two days before a possible deterioration of the country's public debt by the rating agency S&P Global.

The rise in prices, which has reached levels not seen in nearly forty years, hitting households directly in the wallet, marks a welcome lull.

Prices continued to increase year-on-year in May, by 5.1%, but less strongly than in previous months (5.9% in April and 6% at the beginning of the year), according to INSEE. This is a low point since April 2022.

At the origin of the inflationary shock in 2022, energy prices recorded a serious slowdown (2%), while food prices, which have become the main driver of inflation, slowed to 14.1%, although still very high.

The slowdown is also observed for services and manufactured goods.

Consumption at half-mast

"This downward trend should continue into the summer and autumn, in the wake of the general decline in commodity prices," said economist Sylvain Bersinger, in a note from Asterès.

Inflation in France © / AFP

However, "inflation is still there. We are not yet talking about a decrease in prices, rather a slowdown," warned Charlotte de Montpellier, economist at ING, interviewed by AFP.

According to the governor of the Bank of France, François Villeroy de Galhau, it is "very likely that we have passed the peak" of inflation.

In an attempt to stop the spiral of prices on supermarket shelves, however, the government is urging the food giants to reopen negotiations with distributors.

If inflation slows down, the poor household consumption figures are darkening the horizon.

Consumption, which is one of the main drivers of growth, continued its decline in April, falling by 1%, after -0.8% in March and -0.3% in February, due to lower consumption of energy and food products.

"Normally, when there's a fall, it bounces back after. It doesn't bounce back," says Charlotte de Montpellier. "It's clear: the economic outlook is darkening very sharply and very quickly," she commented, "we will probably have to expect a weaker second quarter than the first" in terms of growth.


Between January and March, the gross domestic product (GDP) of the France recorded a moderate increase of 0.2%, supported by foreign trade while domestic demand was at half-mast, according to INSEE.

GDP of France © Valentin RAKOVSKY, Samuel BARBOSA / AFP

This evolution follows a sluggish growth in the fourth quarter (0%), revised down by 0.1 point as that of the whole of 2022, to 2.5%.

Business investment fell, penalized in particular by the credit crunch and the rise in interest rates after the European Central Bank (ECB) tightened strongly monetary policy to curb inflation and return to the 2% target by 2025.

The whole of 2023 is expected to be marked by a sharp slowdown.

Economy Minister Bruno Le Maire confirmed on Wednesday his expectation of growth at 1%, more optimistic than the forecasts of the Bank of France (0.6%) or the International Monetary Fund (IMF) (0.7%).

"We have economic results that are solid, with growth that remained at 0.2% in the first quarter where our German neighbor is in recession," he said on France Inter.

Before the long-awaited assessment of S&P, he also reaffirmed his determination to restore public finances battered by the health and energy crises, assuring that he would be "intractable" on the reduction of deficits and on the deleveraging of the France.

© 2023 AFP