four questions on the fall in inflation in May, the lowest for a year

Consumer prices are up 5.1% year on year in May, according to INSEE estimates, while they had increased by more than 6% at the start of the year.

“Inflation is slowing down, and it is even slowing down sharply”, rejoiced the Minister of the Economy, Bruno Le Maire, at the microphone of France Inter. The rise in prices fell sharply in May, to 5.1% over one year, after reaching 6.3% in February, according to provisional estimates communicated by INSEE on Wednesday 31 May.

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“For the first time in a year, the annual shift in consumer prices in France has fallen from its plateau which was around 6%”commented on Twitter the head of the business cycle department of the statistics institute, Julien Pouget. This decline in inflation raises several questions to which franceinfo provides some answers.

1What are the sectors where the fall in inflation is the most marked?

The drop in inflation is mainly linked to the slowdown in energy prices, which rose only 2% year on year in May, after jumping 6.8% in April. The decline is clear compared to the year 2022, where the prices of electricity, gas and fuel had even experienced double-digit inflation.

“We expected this slowdown in the rise in energy prices, because there is a sharp drop in demand for a barrel of oil”, comments Anne-Sophie Alsif, chief economist at the BDO analyst firm. On the supply side, the situation is also less tense than when the war in Ukraine broke out in February 2022. Since, “countries have diversified their sources of supply”analyzes the expert.

The slowdown can also be observed for manufactured goods, the price of which increased by 4.1% over one year in May, against 4.6% in April. On the services side, a slight deceleration is also notable (+3% in May, after 3.2% in April).

2Is food still driving inflation?

Yes, the food sector continues to fuel the rise in consumer prices. However, a decline seems to be beginning. Food prices rose 14.1% year on year in May, from 15% in April. In detail, the rise in fresh produce prices continued almost at the same rate as the previous month, but the cost of other food products rose more slowly. “On food, we must accelerate the decline”insisted Bruno Le Maire on Wednesday morning on France Inter.

The Minister of the Economy once again urged players in the sector to return to the negotiating table, to pass on the fall in commodity prices. “Today, none of these trade negotiations have reopened,” lamented the tenant of Bercy. “Either the manufacturers keep their commitments in the coming days, or I will use the fiscal instrument: taxation to recover the margins and return these margins to consumers”he reiterated.

3Are there any products that escape this trend?

Only tobacco prices continue to accelerate, notes INSEE. In May, inflation for cigarette packs stood at 9.8% year on year. This increase is linked to a revision of the tobacco price schedule, as explained by the website. Since May 1, the price of many packs of cigarettes has risen by between 20 and 90 cents.

Some packages are now displayed at 11 euros in tobacconists. In 2024, this price should be reached for all brands, in accordance with the Social Security financing law passed in December.

4Has the peak of inflation passed?

Inflation is at its lowest since spring 2022. “It is obviously a step in the right direction”greeted the Governor of the Banque de France, François Villeroy de Galhau, who considers that he is “very likely that we have passed the peak” of the price increase. For her part, Anne-Sophie Alsif, however, calls for caution. “We must be wary of this notion of a peak. It is enough that there is the slightest event [sur les marchés mondiaux] and the rise can resume”, recalls the economist.

However, the expert wants to be reassuring about the outlook for the coming months. “Predictions show that inflation will continue to fall this year and next.” However, she warns: “We will never find pre-crisis prices, there will always be inflation, but it has to be at an acceptable level”. In his latest predictionspublished at the end of March, the Banque de France estimates that inflation should fall below 3% by the end of the year, before stabilizing at 2.9% in 2024 and falling back to 2% during of the year 2025.

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