French inflation has hit a new record high. Consumer prices rose by 0.5 percent in May compared to a month earlier, pushed up by food and energy prices. This brings the annual rate of inflation in France to 3.3 percent, the highest since 1991, according to the national statistics office INSEE. Shoppers are hurting. One woman said: “We don’t have much choice, but we buy stuff on promotion. So we try to make do and change what we eat.”
Energy prices jumped more than 15 percent year-on-year in May while food prices rose 5.7 percent in the same period.
Francois Carlier of the consumer magazine “Que Choisir” stressed the French are feeling the pinch: “It’s effectively a historic event, the return of big consumer inflation. And that’s a special problem because it’s centered on essentials like rent, petrol and food.”
Accelerated inflation poses a serious problem for President Nicolas Sarkozy who came to power last year promising to boost purchasing power. Instead, that power has been shrinking for consumers in France. At a supermarket in Paris, shoppers scrutinised prices before picking up articles.
Economists say the INSEE data could strengthen the case for an interest rate hike by the European Central Bank. The ECB said last week it could raise its main interest rate as early as next month.
The INSEE report also highlights France’s current balance of payments deficit that rose to three billion euros in April.