Viewing a single comment thread. View all comments

philassopher-guy t1_izneyr5 wrote

What is with France and Norway not having harsh inflation? Can anyone explain?

127

Lonyo t1_iznlsw7 wrote

A lot of inflation is being caused by energy costs, which impacts all areas (from direct costs to end users to any services/production etc).

France is something like 80% nuclear, and is (now) fully state owned, and has capped the price of electricity within France, since their costs of production haven't increased. They are forgoing excessive profits at the expense of the French people (but that doesn't mean making losses necessarily), as they are charging more in line with historic levels rather than the general electricity market which is being driven by high gas (as in, natural gas) prices across Europe.

So they have minimal energy inflation which means reduced inflation in all other areas.

https://www.reuters.com/business/energy/french-power-price-increase-will-remain-capped-4-2022-minister-2022-01-13/

233

Low_Attention16 t1_izo9xq3 wrote

Makes a great case for nationalizing energy production in all countries.

63

ChocolateBunny t1_izom1xn wrote

It makes a great case for nuclear and renewables. Anything to avoid tangling your economy too much to the handful of fossil fuel producing countries.

86

manzanita2 t1_izofdjg wrote

Energy and Money are quite closely related in that they're a basis for the economy. A century ago we realized that centralizing and nationalizing the source of money was a good thing. It makes some sense to do the same with energy. Particularly energy systems where the infrastructure is not duplicated so that they are natural monopolies. Looking at you electric power grid.

17

cara27hhh t1_izqc4mx wrote

Since inflation is a measure on the average person, nationalising needed services means that the average person is better off during economic downturns

2

jadrad t1_izo5ymr wrote

France also has huge agricultural subsidies and produces most of its own farm goods.

58

TisButA-Zucc t1_izq5x1v wrote

France is absolutely not 80% nuclear, try half of that.

https://ec.europa.eu/eurostat/cache/infographs/energy/bloc-2a.html

17

Cephalopterus_Gigas t1_izqj8m1 wrote

Yeah, the "80% nuclear power" figure is only for electricity and dates back from record figures reached back around 2005–2010; nowadays, nuclear power accounts for approximately 69% of France's electricity mix and 41% of the total energy mix as your source states.

Other reasons not mentioned for the lower inflation are that the government has imposed a freeze of natural gas prices until December 31st, 2022, and put in place rebates on gas (petrol) prices from April 1st onwards in order to contain the increase in gas prices: initially 18 cents by litre, then 30, now 10 until December 31st.

Many people like me, who aren't homeowners and use public transport exclusively, have barely been affected so far, only the increases in food prices have been felt by everyone. However all those measures and the increased borrowing rates for government bonds (OAT) are putting a significant strain on public finances and the Government debt.

17

BestagonIsHexagon t1_izq0ncr wrote

Not only is nuclear state owned, but most renewables (hydro, solar, wind) are also state owned or sold at a fixed price to the state.

7

cannondave t1_izqdcin wrote

>A lot of inflation is being caused by energy costs

And why is the energy cost suddenly so high? And why concentrated in Europe, at the same time?

Answer: A lot of inflation is being caused by energy costs. Electricity prices have increased across the EU. This is due to a combination of factors, but mostly high natural gas prices. In June, Russia cut deliveries of Natural gas by 75%, causing skyrocketing of energy prices in the EU. Russia did this as a response to the EU and US actions against Russia's attempt to gain control of Ukraine.

Luckily, not everyone loses. Because at the same time the EU stops buying energy from Russia, to cover for the energy loss, now the EU has to buy more energy from the US. It's very good news for the US - billions of dollars of business, while Russia loses billions of dollars.

So the next time are in the store and notice that €10 can now buy only half of the food it could a year ago, you might be angry and sad. But instead, be happy, because it's for a good cause - otherwise Ukraine would again have a regime which is Russia friendly. Unacceptable. We will gladly pay half our food to stop that from happening.

The bad news is, the prices will never come back down, but eventually, in around 10-15 years, the salaries will catch up to the new higher prices.

3

Weidz_ t1_izqejen wrote

Idk, being French, this November was the first time ever I got negative on my paycheck before the end of the month, while having a relatively good salary (400€+ than minimum) and not buying any fancy stuff, most of the food I used to buy went +1€ to +3€ in the last two years. +150€ on rental charges. Energy bill went to the roof and the company behind told us they'd start grid power outage tests soon to anticipate for real ones, in which case there is no backup plan atm for emergency calls/services.
If this is what not having harsh inflation is, I have no clue how all these other countries are surviving.

4

Nimeroni t1_izxlebv wrote

The power outage isn't tied to inflation (through the price is tied to inflation, as electricity price is tied to gas price). It's something only happening in France.

It's a combination of bad luck (we need to do some emergency repair in a few reactors), Covid quarantine preventing the routine repairs the last few years, the cold weather greatly increasing our energy consumption (a large chunk of the french heating is electric), and lack of investment in our nuclear capacity since... around 1997 I think.

1

UsrHpns4rctct t1_izniiv8 wrote

I can only speculate, but I sure helps Norway that they at the moment is one of the greatest profiteers of the Russian invasion war into Ukraine. They are taking over a lot of the oil and gas sales that previously came from Russia. They are also exporting a lot of electricity to continental Europe (and UK?).

This is not directly the answer

−8

King_in-the_North t1_iznqde2 wrote

I’m sorry but you clearly don’t understand what causes inflation. All things being equal, putting more money into an economy from oil and gas sales would cause more inflation, not less.

17

UsrHpns4rctct t1_iznsnhz wrote

Well, what you are saying is absolutely correct.

To try to go deeper into the matter (only speculations). A great part of Norwegians own their own house/apartment and most of their loans have a “free flowing interest”, so when the Norwegian bank puts up the interest it quickly affects the private economy. Combine this with the extreme rise in the price of electricity (10-12 times up) and the long “tradition” of using electricity for heating to a greater extent than other countries. These two factors contribute to a quick and greatly weakened buying power in the Norwegian population.

Are my speculation onto something plausible?

4

adebar OP t1_iznw87f wrote

Someone who freely admits they are wrong! Online?! I never thought I'd live to see the day. Thank you for the civil discourse. :-D

6