Macron shields French from some price pain before polls

Bloomberg

French President Emmanuel Macron’s price caps to stop a cost-of-living crisis colliding with April’s elections will slow inflation by about one percentage point at the start of 2022, according to Insee.
The government has earmarked 15.5 billion euros ($17.7 billion) to curb the impact of inflation for households, most of which for mechanisms to limit the effect of surging natural-gas and electricity prices. To deliver the price caps, Macron’s government has also forced state-controlled Electricite de France SA to sell more power at a discount.
While Insee, the French statistics agency, expects the moves to cushion the blow for households, it still forecasts consumer prices rising more than previously projected — reaching 3.3% in February and 3.4% in April.
“The tariff-shield measures on electricity and gas prices will contain inflation significantly,” Insee said in its latest update on the economic outlook. “Without them, the inflation forecast for February would have been at least one
percentage point higher.”

Price Pressure
Inflation is becoming a hot-button issue in France’s election campaign, with contenders vying to replace Macron proposing to boost wages and find other ways to curb prices while also slamming his government for huge spending.
The concern comes despite France taking less of a hit than other parts of the euro area, where inflation reached a record 5.1% in January.
“The surge in energy prices is the No. 1 economic problem now and in the coming months,” Finance Minister Bruno Le Maire told France Inter radio. “Everyone has to participate in the effort to protect households and firms.”
Insee said it’s revising up its inflation forecasts because of an increase in oil prices and bigger contributions from food and manufactured goods. It also predicted slightly slower economic expansion in the first three months due to disruption caused by the coronavirus’s Omicron variant, followed by a sharper acceleration in the second quarter.
“You can sum up this economic survey as growth, but also inflation,” Insee economist Julien Pouget said.