Inflation accelerated further in May, exceeding the 5% mark for the first time since 1985, and, unlike in the 1970s and 1980s, many consumers were not accustomed to the phenomenon, said Jeremy Ducrot, an economist at the La finance for. U.S.
The hairdresser’s meeting has been postponed indefinitely, Netflix subscriptions have been suspended, and the shopping list is shrinking: inflation-weakened households are facing daily arbitrage to try to balance their budgets with inevitably rising costs.
For Jeremy Ducrot, an economist at the La finance pour tous association, the current situation is very specific. “We don’t know how long this will last,” and “there is a great deal of heterogeneity, for example, between rising energy prices and rising but slower food prices.”
These are the purchases that the middle classes are giving up
For the middle class, whose share of the budget is allocated for limited costs (food, rent, energy, daily travel, etc.) is lower than for the most unstable, the first arbitrations are held at insignificant poles.
“Hygiene / beauty, hairdressing and beauty are declining, and we’re finishing a tube of toothpaste,” said Sandra Goybian, director general of the Credoc Research Center.
“Travel, vacations, restaurants, furniture: in the face of uncertainty, we are reducing the purchase of pleasure, and in households that have already saved during the health crisis (Covid), we are strengthening precautionary savings,” she added.
If consumers are no longer accustomed to periods of inflation, detention through Covid has given rise to new habits that lead to low spending on clothing / hygiene / beauty or cultural walks. And what’s new in the face of inflation, some digital subscriptions taken during the crisis may be discontinued.
Netflix cites inflation as one of the factors that influenced its subscriptions in the first quarter. According to a recent study by the Nielsen Institute, 44% of French households that are now paying attention to their spending have limited their “home vacation” budget.
Choice of distributor brands
The first reflex that occurs when budgets are burdened with inflation according to La finance pour tous, “take three statements from the accounts” and look for duplicates, such as insurance, to understand.
But the main costs can not be abandoned, especially for the most unstable, who must find alternatives.
As for food (according to INSEE, consumption fell by 1.1% in April), switching to private labels or even first prices is a reflex – 25% of vulnerable households currently use it – although prices are rising proportionately, according to the Nielsen Institute. .
Abandonment of organics?
It’s easier to procrastinate today because discount distributors like Lidl or Aldi have improved their image: “they talk about the quality of fresh produce, they update their stores, launch loyalty schemes and remain attractive with home apps,” he said. Nicolas Leger, Nielsen’s Analytical Director.
The latest phenomenon is the abandonment of organics (sales have fallen by 6.3% since the beginning of the year), the price of which, he said, has always been a “barrier” to consumption, amplified by inflation.
There is limited room for maneuver for energy sources, whose consumption jumped due to the temperature in April. Nationwide, reducing heating by a few degrees reduces the bill, but on a household scale, rising prices quickly offset the savings.
“Front environmental gestures, which also reduce costs, are not available to everyone,” says Jeremy Ducrot, despite subsidies to change the means of the boiler or car. The same for fuel: “We can slow down, but we always have to refuel.”
According to the latest budget items, the government is setting up targeted assistance (inflation compensation, tariff shield, pump reduction), but the “elephant that will come to the room” has no room for maneuver, according to Sandra Goibyan, it is housing. , “Which increases over 20 years and will not avoid inflation in the coming months.”