According to a Tuesday first estimate by INSEE, inflation in France accelerated to 5.2% in May. This is compared to the 1.2% rate in 2011. Since September 1985, the 5% inflation mark had not been exceeded, mainly due to higher energy prices. Inflation over a year was at 4.8% in April, which is the highest level for nearly 37 years.
However, France’s household consumption fell by 0.4% in April. This is a decrease that was less than the March drop (-1.4% in revised data) according to INSEE. The decline in food consumption (1.1%) is the main reason for this second consecutive month of decline (0.9% in Feb).
Finally, the gross domestic product (GDP), contracted by 0.2% during the first quarter. INSEE revised downwards its initial estimate of 0% growth at the end April. Inflation has made the decline in household consumption more severe than previously thought. The household’s purchasing power fell 1.9% in the first quarter.
