When INSEE publishes its Consumer Price Index (CPI) to measure inflation, many things do not appear or are insufficiently taken into account: housing, tobacco, double charges for single-parent families, credits, insurance, etc. The CGT wants to build a cost-of-living index that reflects the reality of households’ financial burdens, depending on their wealth.

The figures on purchasing power only estimate price changes, regardless of consumption patterns, which vary according to household wealth.

Last September, the consumer price index (CPI), which measures inflation, fell by 0.6% compared with August, but over a year it rose by 5.6%.

This index, which estimates the average change in the prices of products consumed by French households, is calculated monthly by the National Institute of Statistics and Economic Studies (Insee). Published in the Official Gazette, it is law-based.

The problem, and INSEE recognises this, is that this price index is not at all an indicator of the cost of living.

“It does not reflect the burdens borne by households to accommodate themselves – with an increasing proportion of people living alone – to pay insurance, in short, all the expenses constrained or pre-engaged. But these spending weighs differently on the household budget: much more for the lowest incomes than for the wealthiest, and the CPI does not measure it,” insists Mathieu Coq, head of the economic pole at the CGT.

“Even tobacco has come out of the INSEE panel of products, as the price of cigarettes explodes and statistically it is the poorest who smoke the most,” he adds.

According to a note from 2021 of France Strategy, an organization attached to Matignon, 41% of the expenditure of the poorest households go into rent, internet subscriptions, transport, school canteen, etc.
Against 28% for wealthier households.

Not all equal in the face of inflation

Inflation does not have the same impact on everyone: when it rises, the loss of purchasing power is greater at the bottom of the wage scale.

The CGT believes that at least one index point should be added to bring the real cost of living. But rather than this correction, the Confederation’s economic hub is considering creating a cost-of-living index, with different indicators according to social categories. Discussions are being held with the Institute for Economic and Social Research to build this cost-of-living index, closer to the reality experienced by households.

Having an income that changes with the consumer price index does not guarantee that one can maintain one’s standard of living.
It all depends on what prices are going up or not (the fall in the price of five-star hotels has no interest in the world of work, unlike the evolution of the prices of essential goods).

The most important thing is to have a decent income, which immediately involves an SMIC of EUR 2000.

Meanwhile, the trade union organization defends wage indexation on inflation, with the shift in wages from now on.

The moving ladder? It is a mechanism for automatically raising wages and pensions on inflation.

With immediate impact on all branches. The defianced in 1983 by the socialist government of Pierre Mauroy, the de-indexing of salaries to prices is unfortunately confirmed.
As a result, over the past 40 years, wage purchasing power has risen only marginally.

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Inflation is taking hold in France: 6.1% in one year according to INSEE

Editor’s Note: This article comes to us from CGT in France. This article was originally published in August and was the first in of several articles published by the union on the effects of inflation on the working class of France.

This overall rise in prices affects basic necessities: food, energy, fuel, transport, etc. For their part, profits have never been greater for CAC 40 companies, demonstrating that inflation is a powerful indicator of the conflict between capital and labor.

Prices are rising, companies’ margins are exploding, but wages are not keeping pace and the loss of purchasing power is increasing.

“And the purchasing power law passed this summer is just a scattering of measures,” said Boris Plazzi, Confederal CGT Secretary, who is in charge of wages.

Especially since inflation does not have the same impact for everyone: when inflation rises, the loss of purchasing power is greater at the bottom of the wage scale.

“Today, the gap between the rate of inflation announced and the feeling is widening,” says Mathieu Cocq, an economist at the CGT.

Tomorrow, all smicards?

Proof that inflation is rampant, the Smic has, as the law dictates, has already been upgraded four times since the beginning of 2022 (1678.95 gross in August). And after repeatedly “indexing” pensions to price developments, the government decided this summer to a 4% increase in pensions.

“Some economists are talking about 10% inflation by the end of the year,” says Plazzi.

To combat the price increase that has become insurmountable for many households, the CGT is calling for the increase in the Smic to EUR 2 000 gross and the indexation of wages to inflation, with the return to the sliding scale of wages.

It is a mechanism for automatically raising wages and pensions on inflation. With immediate impact on all branches.

“Smic is catching up with low wages, the Smic is a salary to start in the workforce, a grid of grout for workers without a degree,” recalls the CGT spokesperson.

Deleted in 1983 by the socialist government led by Pierre Mauroy, in the name of the fight against inflation, the de-indexation of wages on prices is unfortunately confirmed. As a result, for 40 years, the purchasing power of wages has been gradually snacked.

“In 30 years, the share of wages in France’s wealth creation has lost 10 percentage points of GDP,” says Plazzi, using INSEE data. It is work that pays the price of inflation,” insists the trade unionist.

It is time to return to the staggered wage scale, a mechanism for indexing wages to prices, and equitable redistribution of wealth creation.

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