French Consumption Slows Down Despite Anti-Inflation Policies

With the government's economic relief package scheduled to start in September, many French people still chose to tighten their holiday budgets this summer to cope with soaring inflation.

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Leon Melkonian, a 67-year-old Paris resident, has managed to save about 100 euros per month by buying from budget stores. "It is cheaper than French supermarkets," he said, adding that he now economizes on things he used to like. Nevertheless, he expects government measures to help him improve his living standards.

While energy prices have increased drastically throughout Europe, the French government has capped gas bills for residents at 2021 levels, and electricity prices can only increase by 4 percent per year.

Due chiefly to the growing prices of services, food products, and manufactured goods, the yearly inflation stood at 6.8 percent in July, according to the French National Institute of Statistics and Economic Studies (INSEE).

The tweet reads, "Luckily you live in France if you consider the level of inflation in the rest of the world and how little help you would receive if you lived abroad." The graph shows the Eurozone's Harmonized Consumer Price Index as of July 2022.

To boost household purchasing power amid soaring inflation, France's parliament on Aug. 2 approved a bill that will lift pensions and allow companies to make higher tax-free bonus payments to employees.

Under the bill, the legislation increased pensions and some welfare payments by 4 percent and set a cap on rent increases at 3.5 percent. A state-financed rebate of 18 cents per liter on fuel will be increased to 30 cents in September and October.

Meanwhile, civil servants will receive a 3.5 percent pay bump and companies will be able to offer employees annual tax-free bonuses of 6,000 euros, up from 1,000 euros previously. These measures are expected to cost the French budget about 20 billion euros.