Is cash an anticrisis weapon?
RMC Info 22/09/23
- today’s intervention focuses on the surprising resurgence of cash transactions despite the shift towards digital payments.
AROUND HALF OF FRENCH CONSUMERS CONTINUE TO USE CASH, MAKING IT THE PREFERRED PAYMENT METHOD FOR BUDGET CONTROL, ESPECIALLY FOR SMALL PURCHASES (50%).
- The use of cash is significant in food markets and among individuals with tight budgets, while restaurants and higher-value payments tend to lean towards card payments.
- Despite an overall decrease in spending, prices of certain food items, especially store brands, are decreasing due to fluctuations in wheat prices.
The average wage increase could be between 4 and 5%, thus surpassing the expected inflation rate of between 2 and 3% for 2024.
FUEL VOUCHER, SELLING AT COST PRICE
Europe 1 25/09/23
President Macron announced a subsidy of 100 euros per year per car for workers’ fuel, aiming to ensure fair prices and transparency in fuel costs.
The subsidy is limited to the 50% of the lowest-income earners (approximately 5 million people) and capped at 100 euros per year per car.
- The subsidy will focus on price transparency and cost pricing in the fuel supply chain, involving refineries and distributors to eliminate excessive margins.
- Critics argue that the subsidy of 100 euros per year per car is insufficient and liken it to a token gesture rather than significant relief, given the rise in fuel prices and the cost of living.
- There is skepticism about the effectiveness of targeting refineries and doubts about the real impact on fuel prices, as the subsidy could only result in a modest reduction, about 15 to 20% of the total fuel cost, due to its limited influence on taxes.
Everything is increasing… but for how long?
BFMTV 27/09/23
MIDDLE-CLASS FACING RISING INFLATION
With inflation becoming more pronounced, middle-class families have had to adapt by adopting new habits in their daily expenses.
- Cash payments: Many citizens are now choosing to pay in cash when shopping in stores. This provides them with better visibility of their expenses and direct control over their budget.
- Drive-through services: This practice of picking up purchases directly by car allows households to control their expenses by avoiding impulse purchases and monitoring their basket total directly online.
- More economical choices: Loyalty to major brands is decreasing in favor of store brands. More economical, they often offer a more interesting quality-price ratio during periods of inflation.
- The recent political strategy aimed at stimulating inflation raises concerns. Some economists warn of an imminent recession, a direct consequence of this inflationary policy. It is crucial for the state to review its expenses. Prioritizing the reduction of unnecessary spending could allow for better allocation of resources while preserving essential services for the population.
- The increasing cost of tolls is a reality, as is the rise in taxes on highways and airports. This raises the question: will we witness a continuous increase in toll fees and airfares? Bruno Le Maire argues that taxation is necessary because fuel pollutes. Ecological transition is a government priority, aiming to change consumer behaviors. Major retailers announce cost prices, ending sales below cost. The margin for maneuver is very narrow, and prices can fluctuate even with a simple change in tens.
While INSEE predicts an overall inflation rate of 2.4% for 2024, an increase in wages of 5 to 6% seems imperative. Linking wages to inflation is not sustainable, so it is essential to raise wages. The fuel check, a €100 aid, has been implemented to support 4.5 million French people facing rising costs. However, can this one-time assistance suffice in the face of constant inflation?
Prices will not return to their pre-crisis levels.
Franceinfo 29/09/23
Inflation is decreasing, price increases are slowing down, but the cost of food remains very high.
Bruno Lemaire : « France won’t return to pre-crisis prices »
Since August, a slight downward trend has been observed in the food sector, with a 0.3% decrease according to figures provided by INSEE. However, looking back to October 2021, a general rise in food prices has been noted.
In several consumption areas such as DIY, furniture, household appliances, and clothing, there is a trend of reduced shopping baskets. This could be the result of various dynamics, such as greater consumer caution or more attractive promotional offers from retailers. INSEE, on the other hand, adopts a rather optimistic view regarding goods and services. The institution believes that inflation, which had concerned many households, is beginning to gradually recede, which would be good news for purchasing power. Regarding the evolution of food prices, uncertainty currently prevails. Nevertheless, experts forecast a forthcoming stabilization, which could alleviate consumer concerns in this regard.
What are the economic causes et consequences?
Faced with an economic shock mainly linked to energy and raw material prices (such as the central role played by oil prices), markets have had to adapt. A significant drop in certain products, such as olive oil, was observed after experiencing a sharp increase. These fluctuations are largely explained by the volatility of raw material prices and a reduction in purchase volumes. The current trend reflects a readjustment between supply and demand, which could potentially lead to stabilization of the inflation level.
The persistent threat is the inflation spiral: once it takes hold, production costs tend not to return to normal. Conversely, deflation could prove even more damaging to the economy. Furthermore, constant tensions are felt between retailers and manufacturers, especially in the food sector. Both parties are in a continual struggle to maximize their respective margins in the face of this inflation.
Faced with increasing inflation, the government is considering drastic measures. In order to achieve price reductions, a revival of negotiations with key economic players is on the agenda. A decrease in maritime transport and cereal costs has been observed, which could positively influence final prices for consumers. In this regard, the government plans to approach and negotiate with the 75 largest multinational corporations. The objective is clear: to target and obtain concessions to ensure economic stability.