“Stagnant inflation can occur in the medium term,” warns an economist

"Stagnant inflation can occur in the medium term," warns an economist


Zero growth. Following a strong recovery in 2021, the French economy stalled in the first quarter of 2022. According to a first estimate published on Friday 29 April by the National Institute of Statistics (Insee)growth was 0% in the first three months of the year. At the same time, inflation reached 4.5% in one year in March, something it had not heard since the mid-1980s. To understand this phenomenon, its consequences and the prospects for overcoming this situation, franceinfo interviewed Anne-Sophie Alsif, chief economist at the consulting firm BDO France.

Franceinfo: Growth is stagnant in the first quarter of 2022. This first estimate is well below the 0.3% estimated by INSEE in its latest forecast dating back to early February. How can I explain that;

Anne-Sophie Alsif: We should have had a fairly robust year in terms of growth, but the crisis in Ukraine and energy inflation were there. The phenomenon is rather special, because energy inflation is unstable and depends on external factors: gas and oil prices are rising mainly due to the war.

It’s not a classic inflation cycle, as in the United States. He it is less easy to fight this type of inflation. The elasticity of energy prices is so strong that tax cuts or “energy shield” measures [comme le gel provisoire des prix du gaz instauré jusqu’en juin par le gouvernement] they have no impact on purchasing power, although these measures are expensive. So households consume less.

What to expect in the coming months?

The situation is likely to worsen, it will become more complicated in the coming quarters … Rising energy prices will certainly continue throughout the year, so households will consume less and companies invest less. Something that, mechanically, will have an impact on growth. This is worrying because we will remain in this situation in the medium and even long term.

There will be costs to public finances because measures will be taken to avoid a loss of purchasing power, in a context where we are just coming out of a Covid-related crisis, where debt reduction is linked to measures taken during the healthcare crisis. crisis was finally possible. Less growth and more inflation: this is stagnant inflation, which can occur in the medium term.

How can we hope to get out of this vicious circle?

It is difficult, because you have to act on the confidence of the French. During the Covid crisis, we were able to predict a solution with vaccines. As soon as the first vaccine arrived, it was started again. This is the big difference with the current crisis. Whatever policy the government implements does not work to restore trust. The crisis associated with the war in Ukraine and the global environmental crisis are ingrained in the minds of consumers, who believe in saving.

Do some economic indicators characterize this very gloomy picture?

Energy inflation, stagnant inflation, rising debt … We are not yet in a situation where everything is cumulative, but we must ensure that the eurozone does not fall out. It all depends on what happens next. At the moment, demand is there and macroeconomic indicators are favorable: the unemployment rate is falling and the household savings rate has returned to a level above 2019. At the same time, there is strong inflation: this is a paradox.

It is therefore necessary to respect household consumption [en net recul selon les dernières estimations de l’Insee], crucial for the health of businesses, especially in the transport and agriculture sectors, which are suffering the consequences of the current crisis. We will see in the coming months.


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