Anger over the cost of living that blindsided Emmanuel Macron early in his five-year term is simmering again, turning this Sunday's face-off with nationalist leader Marine Le Pen for the French presidency into a much closer contest.
Inflation hasn't been this strong in France since the 1980s and surveys show that making ends meet is the top concern of voters, well above worries about health and security. Macron preempted the risk to his reelection by spending vast sums earlier this year to cap power prices for households, but Le Pen has gone full throttle campaigning on what the French call their "spending power."
France's current leader is still likely to prevail, but polls show his margin would be much slimmer than in 2017 when he won 66% of the vote, beating Le Pen by some 30 percentage points.
Here are some charts that illustrate Macron's challenge:
In past election cycles, French households became optimistic in the months before voting, even if their hopes typically faded not long after choosing a new leader. This time, Macron is facing a anomalous headwind: the official measure of French consumer confidence has been on a downward trend since June last year.
In the first round of voting on April 10, both candidates improved their vote share overall compared to 2017. But Macron — dubbed 'president of the rich' by leftist rivals — didn't notch up as many gains as Le Pen in constituencies with the lowest wage levels. At the other end of the earnings spectrum, the incumbent gained more support than his nationalist rival in areas where incomes are higher.
The cost of living crisis is by far the biggest issue for French voters in 2022 and concerns have increased in recent weeks as Russia's invasion of Ukraine sent energy prices surging. Le Pen is promising radical measures including eliminating sales taxes on some goods and exempting businesses from levies if they raise salaries by 10%. That is resonating with voters who, according to one poll, say Le Pen has better answers than Macron when it comes to boosting their income, even if they consider he would be a better president for the economy overall.
Record Inflation, Record Angst
If prices explain confidence, the French are right to be worried. Inflation at 5.1% is the strongest since the euro became the country's currency more than 20 years ago. Using pre-euro measures of cost pressure, annual price increases haven't been this steep for more than three decades. Inflation expectations are at the highest level since statistics agency Insee began surveying price concerns in 1972.
It Could Be Worse
One argument Macron has on his side is that the cost crunch isn't as painful in France as most other European countries, at least not yet. His government has earmarked around 25 billion euros this year to cover the cost of several measures, from capping electricity prices to temporarily reducing tax on gasoline. In March, Insee estimated the measures reduced France's inflation rate by around 1.5 percentage points.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.