“We are at the peak of inflation, an inflation that should start to fall in 2023 and become more bearable for the French.” Visiting a supermarket on Friday, government spokesman Olivier Véran once again estimated that the country was at the peak of inflation.

Is the former Minister of Health used to commenting on “pollution spikes” since 2020, showing too much optimism about the evolution of prices this time?

According to INSEE, inflation has risen steadily in recent months in France. 4.8% in April, 5.2% in May, 5.8% in June, 6.1% in July… The evolution of prices does not seem to be marking time at the moment, either in France or in the vast majority of western economies even more affected .

What would be that inflationary peak announced -or at least expected- by ​​the government? This would not be a return to the previous pricing situation. Your baguette or ground beef has little chance of recovering its pre-crisis price. It would then be deflation, a rare phenomenon and also much more damaging to economies than inflation.

The peak of inflation would rather be a period of stagnation in the level of price increases. The latter would continue to increase at a high rate (around 6% today) but the rate of growth would stop progressing. Once this peak has been reached, inflation could fall back to its “normal” level of around 2% from previous years. An expected ebb in the course of 2023 by the government.

The price drop started

A scenario shared by some economists for whom inflation was mainly due to post-Covid disorganization.

Other factors argue in favor of this relatively optimistic scenario for inflation. For several months, most commodities and food commodities have trended lower. The price of wheat has fallen by 24% from its peak in May to 327 euros per tonne at the end of August. Same for corn.

On the ocean freight side, restraint is in order. The price of container rental skyrocketed in the post-Covid period. gold from the peak of september 2021, their prices decreased by 40%. Oil, meanwhile, remains below $100 a barrel after approaching $130 in early March.

Enough to expect a partial reduction in production costs and thus a pause on the inflation front.

Some distributors have also made it known in recent days that they have observed a certain slowdown in the increase in prices offered by their suppliers. This is the case for Lidl’s Michel Biero, who expects inflation to be a little less strong than expected at the end of the year.

Gas and electricity to the maximum

Optimistic forecasts that should be tempered. Especially because of energy prices. If oil has returned to pre-war levels in Ukraine, this is not the case for natural gas and electricity. After several months of decline, gas rose again this summer and returned to its March level above 300 euros per megawatt hour (MWh). The drop in supply from Russia and a particularly hot and intensive summer in air conditioning explain this rise in prices. A harsh winter could increase this need for gas and fuel price increases.

The same observation for electricity. Wholesale prices per MWh in 2023 contracts now reach €1,000 in France versus €85 a year ago at the same time. In France, only 24 of EDF’s 56 nuclear reactors currently in operation, in particular due to a corrosion problem, which has reduced French electricity production to a historically low level.

Increases that by themselves can compromise the hypothesis of the inflationary peak already reached. Especially since the explosion in energy prices is going relatively unnoticed at the moment in France with the shield on gas and the limitation of the rise in electricity prices.

The scenario currently contemplated by the European Central Bank is a gradual decline in inflation that would not return to its pre-crisis level, around 2%, before 2024.