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Record French inflation adds to pressure on Macron

French April inflation higher than expected at record 5.4%
French April inflation higher than expected at record 5.4%   -   Copyright  Thomson Reuters 2022
By Reuters

By Leigh Thomas

PARIS -French inflation jumped to a record high in April, driven by surging energy prices, preliminary data showed on Friday, putting pressure on newly re-elected president Emmanuel Macron to enact anti-inflation measures promised during his campaign.

The INSEE statistics agency said consumer prices rose 0.5% in April, for an annual rate of 5.4%, the highest since France began using European Union methodology in the early 1990s. Inflation had been 5.1% in March.

The increase, boosted by 26.6% yearly increase in energy prices but also higher prices for services and manufactured goods, beat average expectations in a Reuters poll of 17 economists for inflation to remain unchanged.

The surge is bad news for Macron as he prepares for legislative elections in May, having won a second term this month after a campaign that focused on the rising cost of living as prices outstrip wages.

Macron’s government has so far managed to keep inflation lower than any other euro zone country apart from Malta thanks to a 25 billion euro ($26 billion) package to help consumers cope with rising prices, largely through caps on energy price increases.

The head of the hardline CGT union, Philippe Martinez, told Reuters: “The government has got to deal with the purchasing power problem by raising wages.”

Macron signalled during his campaign that he wanted to deliver an anti-inflation law this summer that would increase handouts for low-income households to cope with rising fuel and food prices, as well as raise pensions.

With inflation eroding households’ purchasing power, France’s economic growth unexpectedly ground to a halt in the first quarter due to a sharp drop in consumer spending, INSEE said in a separate GDP report.

In its monthly inflation report, INSEE said annual inflation as measured by France’s national consumer price index rose to 4.8% in April from 4.5% in March, hitting its highest since November 1985. Economists polled by Reuters had expected 4.5% on average in April.

The national index is more closely followed in France, while the EU-harmonised index is used abroad to compare inflation rates among countries using the euro. ($1 = 0.9523 euros)