Inflation and energy: is France at risk of a baguette crisis?

Inflation in France is comparatively low – and yet the mood in the country is tense. Soon, rising prices could hit a national symbol – the baguette. And then?

The long, raw dough worms are placed on the oversized baking sheet at breakneck speed, one after the other. Here in the bakery in the 15th arrondissement of Paris everything is handmade. The French national symbol is born: the baguette. Score briefly with a razor blade to make the bread extra crispy. Then it goes into the oven.

This is how 600 to 700 baguettes are made every day in Jean-Yves Bouiller’s bakery. He has been running the “Le Moulin de la Croix-Nivert” bakery for eight years. But the current situation is causing problems for the baker: “The prices of all our basic ingredients have not only risen, they have exploded. Flour is now 25 to 30 percent more expensive, salt and sugar 80 percent. And butter is twice as expensive.”

Because of the rising costs, he has already had to raise the prices: “The classic baguette cost one euro, now we’re at 1.05 euros. That’s five cents more for now. But if the state doesn’t do anything, it will eventually cost 1.40 euros or 1.50 euros,” he explains.

The baguette price – a political issue

Rising prices are always a big issue in France, and the baguette price in particular is a political issue. “The baguette in France has a huge symbolism. It must remain affordable for everyone, regardless of who they are, rich or poor. Everyone has the right to their baguette,” says Bouiller.

Unlike most other companies and households in France, Bouiller has not received any government funding so far. “So far, only smaller bakeries with less energy consumption have been subsidised,” he explains.

Energy costs will soon skyrocket

The baguettes have to bake for 20 minutes at 255 degrees – always fresh, all day long. The oven uses a lot of energy. Bouiller dreads the end of the year. Then his current electricity contract expires with a fixed price: “We expect that the costs for energy will triple. We will be upgraded from 3,500 euros to 10,000 euros per month.”

He is worried that he will have to raise his prices even further. The country has been noticing for weeks how much fuel there is in rising prices in France. Refinery workers have paralyzed many regions with strikes. Their demand: wages adjusted to rising prices. The consequence. In many places there was simply no more petrol.

Subsidy, but no petrol

Baker Bouillers also had to struggle with this. Every morning he delivers baguettes and baked goods to a restaurant across town. Getting gas has been a challenge for him in recent weeks. In the Paris region, more than half of the gas stations had supply problems as a result of the strikes.

It doesn’t help that the French government has been pushing down the price of petrol for months with a subsidy of 30 cents per liter. “It’s a good move,” said Bouiller. “It was originally supposed to run until the end of October. Now it has been extended to mid-November. So there is this discount, but no petrol at the gas stations because of the strikes.”

Inflation curbed

The petrol price subsidy, which runs until mid-November, is one of the numerous measures taken by the French government to curb inflation. The state simply takes on a large part of the additional products itself. As a result, France had the lowest inflation rate in Europe at an estimated 6.2 percent at the end of September.

The already heavily indebted French state is digging deep into its pockets for the measures: the state is spending more than 100 billion euros to protect its citizens from price increases.

Gas and electricity capped

Nathalie Andrieux-Hennequin is a social worker. She lives with her dog in a small house in Bezons, a suburb about ten kilometers from Paris. Their three children recently moved out. Especially with lower incomes, the rising food prices have an impact.

Nathalie’s electricity and gas prices, on the other hand, have only risen slightly. Electricity and gas are capped for all households. A maximum of 15 percent price increase by the end of 2023 – compared to the pre-crisis level. The state takes care of everything. 45 billion euros are earmarked for this in 2023 alone.

According to estimates, the state is already paying up to 70 percent of the increased electricity and energy costs. “There’s no way around it. There’s a lot of social explosives and otherwise things will really explode here. The state is taking action against the price increases so that the whole country doesn’t take to the streets,” says Andrieux-Hennequin.

The demos are still manageable

She, who is also a union activist, took part in the demonstration for higher wages last week. There were demonstrations in many cities, but there were far fewer people on the streets than at other social protests in the country.

Andrieux-Hennequin is committed to more purchasing power. The fact that the burden in France is lower than in other European countries because of the government measures is not an issue for her: “The fact that it is worse elsewhere than in France does not mean that you shouldn’t criticize anything. You can only do it if people fight also achieve that wealth is distributed differently.”

high price

France is paying a high price for the measures: a worsening of the already considerable national debt. The question is how much longer France can afford the course.

Baker Bouiller hopes that his bakery, like many other companies, will soon receive grants. Even if the national debt increases as a result of the measures, it is important to keep the economy running. “In France there is basically a lot of state support. Of course, this is also financed by our taxes. If there are fewer people who pay in due to company bankruptcies, fewer people can be helped. Then everything falls apart,” says Bouiller.

As much as possible, he wants to avoid having to raise his prices any further. Because especially with the baguette, the effect is immense.

You can see this and other reports in Europamagazin – on Sunday at 12.45 p.m. in the first.