French Economy: Inflation picks up in July - What is happening?

France, deeply immersed in an unprecedented political crisis, is preparing for the 2024 Olympic Games as a showcase of stability and prosperity. However, behind this spectacle lies a more complex economic reality. In July, inflation slightly resumed, reaching 2.3%, mainly due to the rise in energy prices. The text below explores in detail the recent developments in inflation and growth in France.

The rise in energy prices, a key factor in inflation

Despite a slight slowdown in June, inflation, closely related to Bitcoin (BTC), picked up again in July, mainly due to the sharp increase in energy prices.

The INSEE reports a spectacular increase of 8.5% in energy prices, compared to 4.8% in June. According to UFC-Que Choisir, this sector has become the most inflationary in household budgets, with a 21% increase in the average annual bill compared to January 2022.

This trend is alarming because it indicates that energy costs will likely continue to rise, putting more and more strain on the purchasing power of the French people.

Dependence on gas prices, even when France does not need it, makes the situation even more volatile and unpredictable for the coming years.

• Average annual energy bill up 21% compared to January 2022.
• Energy price increase: 4.8% in June, 8.5% in July.
• Dependence on gas prices projected until 2035.

French economy: Modest growth despite challenges

Despite this inflationary turbulence, France is showing modest economic growth. According to INSEE, GDP grew by 0.3% in the second quarter of 2024, slightly exceeding economists’ forecasts.

This performance, described as “excellent” by the resigning Economy Minister Bruno Le Maire, highlights a certain resilience of the French economy.

The cumulative growth for the year has already reached 1%, suggesting the possibility of exceeding government forecasts. This economic recovery, albeit modest, stands out from other major European economies, notably Germany.

It remains to be seen whether this positive dynamic can be sustained in the face of persistent challenges such as inflation and the energy crisis.

In conclusion, despite economic and political challenges, France has recorded some notable advances. Fortunately, EDF has announced the end of electricity price surges in France by 2025. But will inflation really go away?