The French economy may be on the brink of a restart, thanks to the continued decline in inflation. According to provisional figures from INSEE, inflation slowed down 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 same period, with household consumption and business investments playing a significant role. This growth 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. However, there are optimistic signs of progress that remain unclear how government plans to reduce deficit and make savings will impact this positive trajectory seen recently.