The French economy may finally be on the road to recovery as inflation continues to decline, according to recent data from INSEE. In April, inflation fell to 2.2% over one year, down from 2.3% in March and significantly lower than the 5.9% seen in April 2023. This decline can be attributed to several 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 affecting household purchasing power in the first quarter, the French GDP increased by 0.2% in the same period. 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. However, 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 this positive growth trajectory seen recently.