Inflation in the context of geopolitics in France and the eurozone

Abstract

The article seeks to examine the relationship between the current surge in inflation in the eurozone in general and in France in particular, the economic growth problems and the resulting erosion of the population purchasing power. It was found that the surge in inflation began even before the geopolitical tensions of early 2022 and was associated with large-scale packages of State assistance to the population and businesses to combat the economic downturn caused by the outbreak of COVID-19. The rise in inflation at the end of 2021 was linked to monetary factors, and inflation in 2022 became a more complex phenomenon when its acceleration began to acquire a mixed monetary and non-monetary character. This is due to geopolitical transformations that have led to an increase in prices for energy and other raw materials. It is shown that inflation undermines economic growth prospects and erodes household purchasing power. It is concluded that the anti-inflationary monetary policy of the European Central Bank will affect the inflation rate. Yet, at the same time, economic growth will also slow down in the medium term. Not only France, but also other eurozone countries as a whole are interested in stimulating it. Simultaneously, the situation regarding income and purchasing power will display positive, but insignificant dynamics. The article evaluates measures aimed at propping up purchasing power in France as one of the leading countries of the European Union. The French State possesses and employs a wide range of opportunities to underpin the economy.