Inflationary pressures in France continue to grow. The INSEE trade survey in May set a new record, with a balance of opinion on expected selling prices reaching 43, compared to 36 in April and a long-term average of -2.
The real estate development sector recorded the largest share of companies anticipating price increases. This echoes the rise in the price of building materials and reflects strong household demand: on average over the last three months, nearly 25% of households in the INSEE consumption survey indicated that they intended to spending on housing construction (against a long-term average of 21%). That said, the proportion is down from the 26.7% figure reported for October 2021, suggesting that this demand has faltered somewhat in the face of high inflation.
The food sector was next in the list of sectors with the largest share of companies planning to raise their prices. This would follow already large increases, as evidenced by the food component of the consumer price index, which increased by 3.2% between February and May 2022. These increases are likely to continue: our estimates suggest that they will reach 4.2% between May and December. 2022, in line with sector expectations.
All in all, the new retail price increases suggested by the INSEE survey imply that inflation has not yet peaked, although it reached 5.2% y/y in May (5, 8% y/y on the harmonized index), its highest level since 1985. Our estimates indicate that inflation will reach around 6.5% y/y in September.
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