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According to OFCE, purchasing power is expected to increase by 1% this year.

The work hardly pays anymore. Purchasing power in France is set to rise by 1%, or 380 euros, this year, the French Observatory of Economic Conditions (OFCE) predicts, mainly due to a revaluation of pensions and asset income. But work costs will fall by €40 despite a 0.8% rise in real wages due to falling employment and falling incomes for the self-employed.

This purchasing power is calculated on average per unit of consumption (UC), an indicator that takes into account the composition of households. This will be facilitated by an increase in income from assets (real estate, interest on savings, etc.) in the amount of 190 euros.

It will also be supported by social benefits (+250 euros) thanks to indexations at the beginning of the year, including 5.3% on pensions, which could be higher than inflation expected for 2024, according to OFCE. Deductions will affect the purchase of power 20 euros. At the end of 2024, purchasing power will be 2.6 points higher than the level of the end of 2019.

Covid: Social benefits support purchasing power

The Observatory notes “very different dynamics” between income sources in recent years, marked by “two specific shocks”: Covid and the energy and inflation crisis. During Covid (2019-2021), purchasing power per CU increased by €350 per year thanks to social benefits paid during the pandemic (€280). It increased less (€10 per year) between 2021 and 2023, a period of inflation, but was supported by a significant increase in wealth income (€390), related in particular to rising interest rates.

These “improportions” create “heterogeneous situations” between households, said OFCE, which noted that the consumer basket increased by less than 10.7% for the 10% of least affected households, but by more than 13.9% for 10% of households. households most exposed to the shock. They are more common in rural areas, among low-income households and among pensioners.

The richest will be in favor between 2021 and 2023

Between 2021 and 2023, the purchasing power of households in the bottom 10%, i.e. the 1st decile, increased slightly (0.3% per year). But because their savings rate is negative, there is “less deterioration in their financial situation,” OFCE said.

The purchasing power of households belonging to deciles 2 to 7, that is, 60% of households, decreased by -0.3% to -0.8%. In the eighth decile the rate was stable. On the other hand, the share of households in the ninth decile increased by 0.4%, and among the richest 10% by 1.2%.

Source: Le Parisien

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