Why the French Are Saving More and More

In the second quarter, the household savings rate reached 18.8% of gross disposable income, up 0.6 percentage points from the first-quarter rate (18.2%).

According to the Cercles des épargnants, this increase in the savings rate reflects households’ high level of concern about rising inflation. On average, the French have not touched the savings they have built up since the start of the health crisis in 2020. The rise in the savings rate has been made possible by the resilience of household purchasing power in the face of rising prices. In the second quarter, purchasing power increased by 0.1%, following a 0.6% decline in the first quarter. This change in purchasing power can be attributed to wage increases and a slight decline in inflation. Since consumer spending fell by 0.5% during the same period, the share of income allocated to savings increased by 0.6 percentage points.
 

Households continue to favor precautionary savings, particularly regulated products such as the Livret A, the Livret de Développement Durable et Solidaire (LDDS), and the Livret d’Épargne Populaire (LEP). These products offer returns that are considered attractive, even if they do not fully offset inflation (with the exception of the LEP). In terms of security, liquidity, and tax treatment, these products meet the expectations of the French public. It is also worth noting that households are increasingly turning to time deposits, which are not subject to deposit limits and offer increasingly higher returns.
 

This preference for short-term savings comes at the expense of long-term products such as euro-denominated life insurance funds or the Home Savings Plan (Plan d’Épargne Logement).
During the second half of the year, the savings rate is expected to decline in line with a pickup in consumer spending anticipated during the summer vacation, the start of the school year, and the end-of-year holidays. Furthermore, the decline in inflation—provided it is confirmed—could boost household confidence and lead households to spend more.