French Inflation Halved by Energy Tariff Shield Measure

On Thursday, France's National Institute of Statistics and Economic Studies (INSEE) reported that the energy tariff shield introduced by the Parliament had stopped inflation from rising by 3.1 percentage points between the second quarter of 2021 and the second quarter of 2022.

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According to a report written by INSEE economists Alexandre Bourgeois and Raphael Lafrogne-Joussier, two-thirds of inflation during that period resulted from the "higher cost of energy consumed by households themselves for transportation and heating."

Total energy consumption in France in 2021 was 1,778 terawatt hours (TWh), with oil products representing 42 percent of that consumption, electricity 24 percent, and natural gas 20 percent.

Between Q2 2021 and Q2 2022, energy prices for French households increased by 28 percent, INSEE said. However, without the tariff shield measures, prices would have increased by 54 percent.

For companies depending more on electricity than households, the price increase was 20 percent, whereas without the tariff shield measures prices would have risen by 50 percent.

The households with the lowest incomes are the most affected by soaring energy prices. The French Parliament adopted a series of measures on Aug. 4 to increase purchasing power and shield the country against energy price spikes and soaring inflation.

One such measure is a cap on increases in regulated electricity sale tariffs, and prices can only increase by 4 percent per year. A state-financed rebate of 18 euro cents per liter for fuel has also limited the increase in fuel prices between Q2 2021 and Q2 2022.

Gas bills have also been frozen at the level of October 2021, which INSEE said prevented a 47 percent increase in regulated prices between October 2021 and June 2022.