Rising energy prices boosted France’s December inflation figure although falling service costs managed to offset the gain.
France’s year-on-year inflation in December was up at 1.3%, according to INSE. This was in line with market expectations, as well as the same as November. It was also well below the European Central Bank (ECB)’s target of 2%.
December’s figure was mainly due to energy prices rebounding on a yearly basis, up at 1.2% from 0.7% in November. However, the gain was limited by declining service costs, which fell to 2.2% in December from 2.3% in the previous month.
Similarly, food prices dropped, with manufactured goods’ costs also dropping at a quicker rate, at -0.4% in December, from -0.3% in November.
However, tobacco prices increased at the same pace as in November, at 8.7%.
On a month-on-month basis, inflation came in at 0.2% in December, also in line with analyst expectations. It was an increase, however, from November’s -0.1%.
The figure was primarily boosted by airfare prices also seeing a seasonal rebound, rising 16.7%, up from -11.4%.
French inflation expected to grow to 1.4% in 2025
Amelie de Montchalin, France’s budget minister, revealed on TF1 television on Wednesday that the government was aiming for inflation to average about 1.4% in 2025. The government is planning to achieve this target by cutting public spending by between €30bn and €32bn in the country’s budget this year.
The government was optimistic about getting a deal on this year’s budget in parliament by the end of the month, she added.
The European Commission expects inflation in France to average about 1.9% in 2025, before dipping slightly to 1.8% in 2026, whereas gross domestic product (GDP) growth is expected to be 0.8% this year, before rising sharply to 1.4% next year.