France’s purchasing power crisis: Navigating the pinch

With looming elections and a draft budget that aims to address a €305.7bn financing requirement, French households are increasingly in the red. Will wages ever manage to outpace energy inflation?

Inspectors from the departmental directorate for the protection of populations inspect food products to check their origin during a surprise visit at a "Grand Frais" food supermarket in Arras, on January 5, 2026. © François Lo Presti, AFP

Against a backdrop of global conflict, ongoing energy shocks, disrupted trade flows and heightened political tensions in the run-up to landmark elections , financial markets continue to reverberate as governments attempt to manage deficits while curbing inflation . But it isn’t just central bank monetary policy that is having to pivot. France itself is navigating a purchasing power crisis that is affecting households in very real terms, with consequences that extend beyond short-term impact to cost-of-living.

As French Prime Minister Sébastien Lecornu on Thursday addressed the Council of Ministers with his draft budget for national spending across 2027, the question is whether France can endure short-term pains in exchange for longer-term protections.

Purchasing power relates to the monetary value assigned to a particular commodity. In a healthy economic environment, it grows steadily as wage increases outpace low, stable inflation. Consumers are able to pay for items without draining savings. Meanwhile modest price increases encourage spending and investing – and crucially – buying power remains intact.

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