France’s inflation rate rose to 1.3% year-on-year in December, primarily driven by increasing energy prices. Despite this upward trend, declining service costs helped to mitigate the overall impact on consumers.
According to INSEE, the inflation figure aligns with market forecasts, remaining steady from November and significantly below the European Central Bank’s (ECB) target of 2%. The December increase in inflation largely resulted from a rebound in energy prices, which escalated to 1.2%, up from 0.7% in the prior month.
However, the increase in energy costs was somewhat counterbalanced by a drop in service expenses, which fell from 2.3% in November to 2.2% in December. This trend reflects broader consumer patterns, as food prices also decreased, alongside a sharper fall in the costs of manufactured goods, which dropped to -0.4% in December compared to -0.3% the month before.
Interestingly, while many sectors saw price contractions, tobacco prices maintained a consistent rise of 8.7%, mirroring the rate observed in November.
When examining month-on-month changes, inflation showed a modest uptick of 0.2% in December, rebounding from a slight decline of -0.1% in November. The main driver behind this monthly increase was a seasonal rebound in airfare prices, which surged by 16.7%, a stark contrast to the decrease of -11.4% observed in the previous month.
Future Inflation Projections for France
Looking ahead, French Budget Minister Amélie de Montchalin revealed plans to target an average inflation rate of 1.4% by 2025. This ambitious goal is part of a broader strategy to reduce public spending by €30 to €32 billion in the national budget. The government is optimistic about securing parliamentary agreement on the budget by month’s end.
Meanwhile, the European Commission anticipates that inflation in France will average around 1.9% in 2025, before slightly dipping to 1.8% in 2026. Furthermore, the country’s gross domestic product (GDP) growth is forecasted to be 0.8% for this year, with an expected rise to 1.4% next year.
Photo credit & article inspired by: Euronews
