The tariff shield has halved the impact of soaring energy prices in France
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“Without the tariff shield, Iincrease in gas and electricity prices would be at least 100% next year! That is an increase of 120 euros on average per month and per household”, assures the Minister of the Economy, Bruno Le Maire, in an interview with the newspaper The echoesreleased Thursday 1er september. This declaration shortly preceded the publication of an INSEE note which confirms the effectiveness of this set of measures put in place since autumn 2021 to mitigate the impact of inflation for households: the freezing of regulated gas tariffs at their October 2021 level, the capping of the increase in regulated electricity sale tariffs which resulted in a rise of only 4% over the year and, finally, the resetting to the pump, which goes this Thursday from 18 to 30 cents per litre.
According to calculations by INSEE, the tariff shield has played its role as an inflation buffer, by halving the impact of soaring energy prices in France. Thus, between the second quarter of 2021 and that of 2022, by combining the increase in electricity, gas and oil prices, the household energy bill increased by 28%. “This increase would have been twice as high without the shield”, or 54%, ensure the national statisticians. For companies, “energy is 20% more expensive, compared to 50% without a shield”.
Figure of a good student
As for the impact of this measure on the overall inflation figure, it is also significant. Instead of the 5.3% increase recorded between the second quarter of 2021 and the second quarter of 2022, the consumer price index in France would have increased by 8.4%, according to INSEE. “Today, without the shield, we would not be far from 9% inflation in France”, calculates Mathieu Plane, deputy director of the analysis and forecasting department of the French Observatory of Economic Conditions (OFCE). This would have put France in the average of the countries of the euro zone, whereas today it is a good student.
“Freezing prices at source has fairly significant indirect effects”adds Mr. Plane, because it slows down the so-called effects “second round”, for example the rise in rents. This also makes it possible to limit the risk of seeing a price-wage spiral set in motion – the minimum wage being indexed to inflation – and of causing an uncontrollable runaway. Furthermore, “the fact that prices are lower in France translates into a gain in competitiveness compared to our European neighbours”he recalls.
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