The recent decline in inflation in France may lead to a restart of the economy, with initial signs pointing towards a positive direction. According to provisional figures from INSEE, inflation slowed to 2.2% over one year in April, compared to 2.3% in March, and significantly lower than the 5.9% seen in April 2023. This decline can be attributed to various factors, including a slowdown in food prices, tobacco prices, and a slight decrease in manufactured products prices, while energy prices accelerated.
Despite these price increases impacting household purchasing power in the first quarter, the French GDP increased by 0.2% in the first quarter of the year. Household consumption and business investments played a significant role in this growth, which exceeded previous expectations and was welcomed by Bruno Le Maire as a sign of the strength of the French economy. The government’s strategy is said to be paying off, with growth projections of 1% for 2024, although analysts are more conservative in their estimates.
The French economy saw an increase in economic activity in the first quarter due to acceleration in household consumption. Despite challenges such as the deficit surpassing previous targets and concerns about budget cuts impacting growth, there are optimistic signs of progress. It remains to be seen how the government’s plans to reduce deficit and make savings will impact the positive growth trajectory seen recently.