Inflation refers to the loss of a currency’s purchasing power, reflected in a sustained rise in prices. In 2022, this trend reached levels unseen for a long time around the world, coming in at 7% in France and Mexico, 9% in Germany, and up to 20% in some eurozone countries. The direct consequence for consumers has been an erosion of their purchasing power. Edenred’s solutions help mitigate this effect.
A phenomenon with multiple causes
Several macroeconomic and geopolitical factors explain the world’s current high inflation. One is the Covid-19 pandemic, with the lockdowns and restrictions on movement that followed. These disrupted supply chains, pushing up production costs. At the same time, there was higher demand for certain products, such as electronic devices, which also contributed to the rise in prices.
Another factor is the war in Ukraine and the resulting international tensions, which are directly affecting the supply and demand of oil, natural gas, commodities and agricultural products – sending prices further soaring.
Specific-purpose payments, far-reaching benefits
This broad rise in prices means a loss of purchasing power for consumers.
Employers can, however, give an instant boost to employees’ purchasing power through Edenred employee benefits solutions.
These solutions are based on the concept of specific-purpose payments, or funds that can only be used within a certain time frame and for a specific purpose. They are generally backed by a favorable tax framework. Beneficiaries receive a credit that they can spend in addition to their wage, without dipping into their savings.
For public authorities, specific-purpose payment solutions are an instrument of choice for stimulating consumer spending and protecting jobs. These mechanisms also make it possible to support sectors that were hit by the health crisis, such as hospitality and tourism.
Protecting what matters most
In periods of inflation, specific-purpose payment solutions ensure that workers continue to have access to certain goods and services that they might not otherwise be able to afford.
The programs cover areas including food (a more balanced and substantial lunch), mobility (an alternative to the personal vehicle) and well-being, leisure and culture (sometimes considered superfluous expenses).
In some countries, employee engagement platforms even give beneficiaries the ability to choose their own benefits depending on their specific needs.
Edenred is convinced of the benefit of these virtuous mechanisms and worked with public authorities in 2022 to promote the increase of the maximum face value of employee benefit solutions. This had a direct impact on the purchasing power of beneficiaries in many countries.
Potential gain in purchasing power each year for an employee in France thanks to Edenred solutions
of countries where Edenred offers employee benefits solutions increased the face value of at least one of them in 2022