The decline in inflation in France may lead to a restart of the French economy, with initial signs pointing towards positivity. According to provisional figures from INSEE, inflation slowed down to 2.2% over one year in April, compared to 2.3% in March, and significantly lower than the 5.9% seen in April 2023. This decline is attributed to several factors, including a slowdown in food prices, tobacco prices, and a slight decrease in manufactured products prices, while energy prices accelerated.
Despite these price increases impacting household purchasing power negatively in the first quarter, the French GDP increased by 0.2% during this period. Household consumption and business investments played a significant role in driving growth, which surpassed previous expectations and was welcomed by Bruno Le Maire as an indication of the strength of the French economy. The government’s strategy is said to be paying off, with growth projections of 1% for 2024 despite analysts being more conservative with their estimates.
In addition to inflation declining and positive growth projections for next year, there were also increases in economic activity during the first quarter driven by acceleration in household consumption. Despite challenges such as concerns about budget cuts impacting growth and deficit targets being exceeded in 2023, there are optimistic signs of progress moving forward.
It remains uncertain how the government’s plans to reduce deficit and increase savings will impact the positive growth trajectory that has been observed recently. However, if successful, it could lead to long-term stability for both households and businesses alike.
Overall, while there are still some uncertainties about how economic factors will unfold over time
