Sunday, July 12, 2020

Resumption of consumption in May, with the end of containment

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Even if they are still cautious, the French, with the gradual end of confinement since May 11, have returned to the shops.

After the plunge in April in the order of 30% compared to February, consumer spending by households in May is only 7.2% behind the pre-containment period. Henceforth, over one year, household consumption expenditure fell 8.3% in May. According to INSEE, the consumption of manufactured goods has risen without returning to its pre-crisis level (-14% in May, after -62.4% in April compared with February).

This figure can be explained by the “very low” level of purchases of durable goods (transport materials, housing equipment) and expenditure on clothing-textiles. The opening of sales from July 15 could give a boost to this sector. On the other hand, consumption of other manufactured goods “almost returns” to its February level.

Same pattern for energy expenditure: it remained behind that of February (-14.3%): due to the drop in oil prices and less travel.

Food spending remains high

On the other hand, food consumption remains at a “high” level compared to February (+ 4.1%, after + 3.4 in April). Consumption of fresh fruits and vegetables increased slightly, as did that of processed foods from the food industry, after a sharp decline in April and a sharp increase in March, when the French stocked products in anticipation of containment.

In this context, according to producer prices in France rose slightly, only decreasing by 0.2% in May compared to the previous month, after having fallen by 2.3% in April and by 1.5 % in March.

Inflation down 0.1% year on year

Over one year, producer prices fell 3.5% in May, after falling 3.8% in April. The prices of industrial products for the French market fell 0.1% in one month in May, after a decrease of 2.9% in April. Over one year, these prices fell 4.1% in May, after a drop of 4.5% in April.

Inflation, according to INSEE, is now down 0.1% year-on-year in June in France compared to 0.4% the previous month.

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