With inflation estimated at an average of 4.9% over the year and economic growth down to 2.4%, “this contraction in purchasing power will weigh on the dynamics of recovery through the weak dynamics of consumption of households”, judges the French Observatory of Economic Conditions which published its new economic forecasts for 2022 on Thursday.
According to the OFCE, to adapt to this loss of purchasing power, households will above all further curb their consumption, which has already fallen by 1.5% in the first quarter, despite the strong savings accumulated by some households during the Covid-19 pandemic.
The savings rate should still reach 16.7% this year.
“Households continue to save almost 2 points more than they did in the past (before the pandemic, editor’s note)”, underlined Mathieu Plane, deputy director of the analysis and forecasting department of the OFCE during a press conference.
This is firstly explained by the fact that it is above all well-to-do households who have been saving since 2020 and they are less intensely affected by the inflation shock than low-income households.
This also illustrates a “caution” of households in the face of geopolitical uncertainties, according to him.
In total, the OFCE predicts that consumption will increase by 2.5% in 2022 compared to last year.
These forecasts take into account the aid released since the end of 2021 to mitigate the impact of inflation on households, and those promised by Emmanuel Macron which would come into force after the legislative elections (4% increase in pensions and social benefits, increase in the remuneration of public officials that the OFCE estimates at 2%), food voucher, extension of the tariff shield and the fuel discount). The OFCE also assumes a 3.6% increase in wages this year.
All of these measures would make it possible to reduce the rise in prices by 2.1 points in 2022, for expenditure representing 1.7 points of GDP, or approximately 40 billion euros.
In particular, the 4% revaluation of social benefits “will make it possible to very strongly limit the loss of purchasing power” for the households which receive them, underlines Mathieu Plane.