Despite inflation, the French in a better financial position than before the Covid


Posted Oct 13, 2022 5:00 PMUpdated on Oct 14, 2022 at 9:14 am

While inflation hits the most modest first, the study published this Thursday by INSEE delivers a rather reassuring picture. Despite the harmful effects of price rises on the purses of the poorest, financial precariousness has hardly increased in France. In general, it was even down in August 2022 compared to 2019, before the health crisis.

Insecurity has also declined among households with the lowest incomes and inhabitants of rural areas, who are the most affected by inflation due to the greater weight of the energy item in their budget.

All the precariousness indicators used by the statistical institute point in the same direction. There are three of these: the share of households exposed at the end of the month, those with modest gross assets (less than 1,209 euros in 2019, adjusted for price changes thereafter); the share of households with overdrafts of more than five days during the month.

Increase in wealth

The surge in consumer prices, triggered by the post-Covid recovery and then exacerbated by the war in Ukraine, is however beginning to leave its mark. Since the beginning of 2021, the proportion of households overdrawn at the end of the month has increased “slightly”.

To carry out its work, INSEE analyzed anonymised data from the accounts of Crédit Mutuel Alliance Fédéral and La Banque Postale. The examination of the accounts of the La Poste network, very present in the most modest categories, shows among other things “an increase in the indicators of precariousness since the summer of 2021”. “This may be a sign of growing difficulties for some households,” says INSEE.

In its study, the statistical institute also looked at the evolution of the gross financial wealth of households. It emerges that “the increase in gross wealth is observed among all groups of households, whatever their level of income”. A situation which is probably due to the over-savings accumulated by the French during the confinements.

Unsurprisingly, it is among the wealthiest that the rise has been the fastest. Between January 2020 and August 2022, the wealth of the 25% of households with the highest incomes thus jumped by more than 25% at Crédit Mutuel and by more than 22% at La Banque Postale, against respective increases of 16.4% and 12.6% for the most modest.

Since July 2021, galloping inflation has, however, eroded the value of the assets held. The most modest households and large fuel consumers were the first to be penalized: their average gross financial wealth fell by 4.7% in constant euros, compared to a drop limited to 3.4% for all low incomes and even 1% for the general population.

The study also gives indications on the evolution of French spending in the face of soaring prices: these would have increased by 0.8% over one year in July on the sample retained by Crédit Mutuel for inflation by 6%. To preserve their financial situation, households have reduced their consumption in volume. Energy and fuel purchases in particular fell. A beginning of “sobriety”.

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