Inflation: How is France to increase the cost of living?

With the increase in the costs of raw materials and energy in the world, an increase in the cost of living is noticed.In France, particularly, and this for a few months, many households are increasingly difficult to manage their expenses.

A battle for defeating inflation is waged every day against the price of gas, gasoline or foodstuffs.Some solutions have been set up to limit the impact of this inflation.However, since August 2021, instead of lowering, prices have experienced an increase of 1.9 % according to INSEE.

What is inflation?

Inflation is a measure of the rate of increase in prices of goods and services in an economy.It can occur in almost all products or services, including expenses related to needs, such as housing, food, medical care and public services, as well as expenses related to pleasures such as cosmetics, cars and cars and cars and carsjewelry.

In France, it is the National Institute of Statistics and Economic Studies (INSEE) which is responsible for assessing the increase (inflation) or the decline (deflation) of consumer prices (IPC) each month each month in Consumer prices (IPC)France, including in the overseas departments (except Mayotte).

France records an inflation of +1.3 % on foodstuffs

In July, consumer prices had already increased by 1.2 %.Currently, the percentage of inflation is around 1.9 % in practically less than a year.The cause of this important inflation can be the increase in prices for manufactured products, or +1.1 %.

Energy prices have increased by +12.7 %, +1.3 % for food prices, +0.7 % for services prices, +5.1 % for the rise inTobacco prices.These observations on inflation, in a post-health climate, could affect the revival of economic activities and above all create more social demonstration movements.

Who benefits from inflation?

If consumers take advantage of inflation, investors can take advantage of the increase in inflation if they hold assets in markets that benefit from inflation.For example, those who invest in companies in the energy sector can see the course of their shares increase if energy prices are increasing.As an investor, taking advantage of the increase in inflation amounts to intelligently investing your money because companies can also be affected by inflation if it is the result of an increase in production costs.

It is with this in mind that Maxim Manturov, head of investment research at Freedom Finance Europe, says that: "Inflation is a natural phenomenon in a market economy.There are many ways to protect yourself from inflation.A disciplined investor can plan inflation by investing in asset classes that outperform the market in an inflationary climate.

In the case of any diverse portfolio, maintaining classes of covered in inflation can help your wallet grow when inflation reaches high levels.In general, current anti-inflationary assets include gold, raw materials, various real estate investments, and even partially bitcoin and cryptocurrencies. ”

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What are the causes of inflation?

The reasons that explain the vertiginous price increase are multiple and differ depending on the products.The causes of inflation are of two orders: the revival of the economy and the increase in the price of raw materials, especially due to climate change.

The revival of the global economy

She provoked a general bottleneck.After being paralyzed for many months, companies have resumed their activities and demand exploded in many sectors, mainly raw materials and oil.A demand too strong for supply thus leads to an increase in prices, hence an impact on consumers.

The increases in the price of raw materials

Between the latest bad weather in Europe and the heat dome that touched Canada, a hard wheat shortage is recorded.The scarcity of this primary resource creates the inflation recorded on the cost of foodstuffs of the first necessity in the image, pasta or even bread.Also let's not forget the price of gas which experiences an inflation of 9 % and that of gasoline which is around 2 euros per liter.

Is France the only country concerned by inflation?

No, France is not the only country, which is struck by inflation.In the United States, in October 2021, prices had increased by 6.2 % compared to October 2020, according to the percentage of variation over 12 months of the consumer price index, respectively the monthly inflation rate ofgoods and services in the United States.

The increase in consumer prices in the United States

Source: Statista

Likewise, some countries in Europe have not escaped the price increase, even if it remains less important than on the other side of the Atlantic.

According to Eurostat, the annual inflation rate of the euro zone established 3.0 % in August 2021, against 2.2 % in July.A year earlier, it was -0.2 %.The annual inflation rate of the European Union was 3.2 % in August 2021, compared to 2.5 % in July.A year earlier, it was 0.4 %

Annual inflation rate of European Union countries in August 2021

Source: Eurostat

How does France attack the cost of living?

Faced with the vertiginous increase in the cost of living and the anger of the street, France announced last October an aid of 100 euros for people with low to means and promised to freeze the prices of theEssence to try to contain the growing anger aroused by record prices of fuel and the increase in the cost of living.

The Prime Minister, Jean Castex, said that an inflation compensation would be granted to all those who earn less than 2,000 euros net per month, including workers in the private and public sector, the self -employed, job seekers andretirees.

The first payments took place at the end of December.This measure would affect approximately 38 million people and gasoline prices would also be "frozen for 2022".

In addition to this measure, there is the energy check, which is a contribution from the French State created in 2018 to help households with modest income to pay their energy -related invoices.In 2019, around 6 million households benefited from the energy check.This measure made it possible to relieve many households.Note that the number of beneficiaries continues to increase.At the end of 2021, the government paid an exceptional energy check of € 100 to 5.8 million households benefiting from the 2021 energy check.

Namely: there are also in parallel the social tariffs of energy (TPN for electricity and TSS for gas).

Images Source: Freepik

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