Categories: Economy

Inflation in France hits its lowest stage in 4 years in February

Pushed by a drop in electrical energy costs, the buyer worth index fell to 0.8% in February, after +1.7% in January, in accordance with a flash estimate by French statistics workplace Insee. On a month-to-month foundation, costs haven’t modified in France.

The EU harmonised index is barely barely increased, 0.9% for February in contrast with final 12 months.

The slowdown in inflation within the EU’s second-biggest financial system is fuelling additional expectations that the European Central Financial institution (ECB) will lower the deposit fee by one other 25 foundation factors to 2.5% subsequent week.

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The very low inflation in February 2025, the bottom since February 2021, is defined specifically by the autumn in electrical energy costs”, mentioned chief economist Sylvain Bersinger from Paris-based financial advisor Asterès.

After two years of successive will increase, a mean fall of 15% in electrical energy costs got here into impact on 1 February for greater than 24 million subscribers. The power inflation sat at -5.7% in February in contrast with final 12 months.

However, meals costs elevated barely over one 12 months, in contrast to service costs which slowed. Manufactured merchandise and tobacco additionally slowed down however to a lesser extent.

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“Within the coming months and quarters, inflation is just not anticipated to stay at such a low stage because of barely inflationary developments within the manufacturing chain,” mentioned Bersinger including that “inflation is predicted to rise barely in spring 2025, whereas remaining under 2%.”

He expects industrial manufacturing costs to start out climbing after displaying no change in January 2025, and an extra rise in agricultural manufacturing costs.

However, “the slowdown in wage progress will forestall inflation from rebounding sharply. Whereas wages had elevated by greater than 5% year-on-year within the fourth quarter of 2022, the rise was solely 2.1% within the fourth quarter of 2024. This growth, anticipated because of the fall in inflation, will restrict the rise in enterprise prices, and due to this fact the rise in costs”, mentioned Bersinger.

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French inflation figures in February stand out from different European nations. In Spain, inflation climbed to 2.9% over one 12 months this month.

In Italy costs jumped by 1.7% in contrast with final 12 months, in accordance with the Italian Statistics Workplace ISTAT’s preliminary estimates, which is the best inflation fee since September 2023.

Italian costs elevated by 0.2% in a month-to-month comparability, the EU harmonised fee was 0.1%

On a quarter-by-quarter foundation, the French financial system contracted by 0.1% within the final three months of 2024, confirming Insee’s preliminary estimates. This compares to an enlargement of 0.4% within the earlier three months which was partly because of the Paris Olympic and Paralympic Video games boosting progress.

Within the final three months of 2024, family consumption progress slowed to +0.3%, and this development continued in January 2025 too in accordance with separate information by Insee, displaying a drop of 0.5% month-on-month.

The French GDP was additionally dragged down on the finish of final 12 months by the declining numbers of fastened funding led by a drop in development funding.

Exports and imports each rose by 0.4%.

On an annual foundation, the financial system expanded by 0.6%, barely under the flash estimate of 0.7%, marking the slowest yearly progress because the final annual contraction on the finish of 2020.

For the total 12 months of 2024, the French GDP grew by 1.1%, similar to it did within the earlier 12 months.

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