The war in Ukraine will support rising prices, which would exceed 4% at the end of March, and may weigh on the morale of consumers and businesses.
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How to measure the cost of war in Ukraine for the French economy? The magnitude of uncertainties on the evolution of the conflict, on the effect of sanctions or counter-sanctions, the possible shortages of raw materials or the difficulties of supply and, finally, the “shock of trust” make the exercise Particularly uncertain and perilous. In its published marketing note, Wednesday, March 16, the Insee Redouble Caution, refusing to give a growth forecast for the whole year 2022. The Banque de France, it has developed two scenarios, published on Monday. March 14: One where growth reaches 3.4% at the end of the year, and the other, more degraded, where it is limited to 2.8%.
But, among the consequences of the conflict, the one on prices is no doubt. According to INSEE, taking the assumption of an oil barrel at $ 125 (113.60 euros), one-year inflation exceeds 4% at the end of March, compared with 3.6% in late February , before reaching 4.5% between April and June. And again, this figure has been mitigated by the tariff shield put in place by the Government, end 2021, to protect households from the effects of rising gas, fuels and electricity.
INSEE believes that in the absence of this measure, inflation would have close the mark of 5% in February. A level such that, contrary to what happened during the CVIV-19 crisis, where public expenditure has canceled the shock on the household purse, the purchasing power will not come out unscathed from the Russo conflict -Ukrainian.
A mood little inclined to expenses
expressed in “consumption unit” – that is, taking into account the size of households – the purchasing power will reduce by at least 0.9% compared to 2021 on the Set of the year, calculates INSEE. On the first quarter, this decline is even more significant, since it reaches 1.4% – but this figure is to be interpreted carefully because it succeeds an atypical quarter. “The payment of inflation indemnity, which represents a quarterly disposable income point, has strongly supported household income, at the end of 2021,” says Julien Pouget, head of the Department of Conjuncture at INSEE. The end of this aid accentuates the drop in purchasing power.
Households, in any case, do not deceive it. “The investigations show a clear drop in the balance of opinion on the general standard of living in France,” says Pouget. The savings rate, which had reached peaks during the COVID crisis, and which was still, at the end of 2021, above its long period of time, is now declining, just as the idea that the Period is conducive to significant purchases, such as capital goods or cars.
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