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JOHN LICHFIELD

OPINION: An inflation ‘tsunami’ is about to hit France

The rise in the cost of living in France is among the lowest in Europe - but that does not mean that it's not already causing pain to consumers, and much worse is set to come in January, warns John Lichfield.

OPINION: An inflation 'tsunami' is about to hit France
Photo by Christophe SIMON / AFP

There are lies, damned lies and official inflation figures. According to the official index, the cost of living in France has risen by 6.2 percent in the last year. If you limit that to food prices alone, the figure rises to 10 percent.

No more? It depends how you count and what you count.

A typical “supermarket basket” of 38 of the most used household items – fish-fingers, shampoo, crisps – cost 16.5 percent more at the end of September than 12 months earlier (according to a survey by Le Monde) .

Cooking oil, according to a government survey, is 60 percent higher than it was a year ago; frozen fruit is up by 40.6 percent, margarine 23.5 percent and flour by 23.5 percent. Terrible news if your favourite “French” dessert is “un crumble”.

The official inflation figure of 6.2 percent (the highest since 1985) may be misleading but it is not wrong. It is held down by rents, domestic energy prices and clothes, which have not risen as much as food.

The French government has spent €150 billion – 5 percent of GDP – in the last year to keep down the cost of electricity, gas, petrol and diesel. This mostly explains why inflation in France is so much lower than other countries. Prices are rising at 11.1 percent in the UK, 10.9 percent in Germany, 12 percent in Belgium and at an 8.5 percent average across the European Union.

READ ALSO How France is keeping its inflation (relatively) low

However, France faces a double shock or delayed reckoning in the New Year – what one senior government official describes as a “waterfall” and what Michel-Edouard Leclerc, head of the E. Leclerc supermarket chain, calls a “tsunami”.

The state subsidies on petrol, gas and electricity cannot be afforded indefinitely and are being wound down. Petrol and diesel rebates have already been reduced and will vanish from January 1st. Instead there will be targeted subsidies for poorer families and those dependant on cars for work.

The big price-totems outside filling stations and in supermarket car-parks – a better guide to the gloomy provincial mood than opinion polls – are already showing petrol and diesel at over €2 a litre.

The government’s 2022 freeze on gas prices and the 4 percent cap on electricity bills for households and small businesses will also disappear at the end of next month.

From January, energy price rises will be limited to 15 percent – still much lower than in other countries.  Unfortunately for the government, French people do not compare their power bills with those of “other countries”.

Food price inflation began with the post-Covid boom and was worsened by hot, dry summers and the Ukraine war. It has been lower in France than in other places. A government report this month found that – far from price gouging – the French farming, food and retail industries have been cutting profit margins to prevent consumer prices from rising even higher.

Unfortunately for the government, French shoppers do not (except a very few) look at supermarket prices elsewhere. Faced with a €120 shopping bill that once cost less than less €100, they tend not to say: “Thank God, we are not British or Belgian or German”.

This is what the senior official means when he warns that the country is paddling towards a “January waterfall”. The government had hoped that market prices for petrol and diesel would have fallen by now – compensating for the loss or reduction of state subsidies. They have not.

Electricity and gas bills will shoot up by 15 percent in the New Year – just as France faces the prospect of selective power cuts. Repairs to its ailing fleet of nuclear power plants remain behind schedule.

EXPLAINED What your French energy bills will look like in 2023

Leclerc also warned on Monday that a “tsunami” of new food price rises lies ahead. Inflation was being “normalised”, he said – in other words producers were unwilling to cut their margins indefinitely. A spiral of higher costs and higher prices was being built into the system.

“Felt” or everyday inflation is mostly food inflation. The poorer the family or the individual, the bigger the share of income spent on food. The government has also tried to soften the impact of high prices on the poor. Apart from the energy subsidies, it sent a €100 “cheque” to all households on low or modest incomes this Autumn.

Unfortunately for the government, memories are short and supermarket prices are high – €100 does not go very far when the price of flour and fish-fingers is rocketing.

When power bills explode and food price spike this winter who will thank the government for sparing France the worst of inflation in 2022?

An opinion poll this week found that 89 percent of French people were miserable about their immediate future. France, unlike other countries, does not do passive gloom for long.

Troubled waters, whether a  “waterfall” or a “tsunami”, lie ahead. 

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POLITICS

Macron calls for stricter Twitter controls on Covid disinformation

French President Emmanuel Macron criticised Twitter's new boss Elon Musk on Thursday, saying the entrepreneur was wrong to drop the fight against Covid disinformation as he slashes back content moderation on the platform.

Macron calls for stricter Twitter controls on Covid disinformation

With his country facing a fresh surge in coronavirus infections, Macron said the subject of misleading Covid information should be addressed head on, not swept under the rug.

“I think this is a big issue,” Macron, on a state visit to the United States, told broadcaster ABC. “What I push very much, for one, is exactly the opposite: more regulation.”

He said such protections have been implemented and enforced in France and “at the European level.”

Freedom of expression remains paramount, Macron insisted, “but there is responsibilities and limits” to what can be written and disseminated.

“You cannot go into the streets and have a racist speech or anti-Semitic speech,” the French leader said. “You cannot put at risk the life of somebody else. Violence is never legitimate in democracy.”

Macron’s concept of freedom of expression within acceptable limits is far from the libertarian approach of Musk, a self-described “free speech absolutist” who has sacked many of the Twitter employees tasked with content moderation.

Musk has begun to allow Twitter users banned from the platform for posting disinformation, such as former US president Donald Trump, to return.

And it emerged this week that Twitter has stopped enforcing a rule preventing users from sharing misleading information about Covid-19 and vaccine effectiveness.

The billionaire Musk has made no secret of his fierce opposition to health restrictions put in place to fight the pandemic, especially when they meant the temporary shuttering of his Tesla electric vehicle factory in California.

“To say that they can not leave their house and they will be arrested if they do… this is fascist. This is not democratic, this is not freedom,” Musk raged in April 2020 on a conference call with analysts.

On Wednesday the European Union issued a sharp warning to Musk, saying he must do “significantly” more to fight disinformation, such as reinforcement of content moderation, in order to comply with EU law.

“There is still huge work ahead” for Twitter, said Thierry Breton, the EU commissioner for the internal market.

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