New data shows that inflation in France fell below 7% in December, having reached a record high the previous month. The news adds weight to the argument that Europe is passing the worst of its inflation problems.
The French statistics adds to recent evidence of diminishing pricing pressures in the euro zone after German inflation dropped for a second consecutive month in December, with Spanish inflation figures announced last week also lower.
After the release of the new statistics, French government yields declined and European equities rose on the expectation that Europe’s inflation crisis may be abating.
According to preliminary EU-harmonised figures from the national statistics office INSEE, the inflation rate in France decreased to 6.7% in December. This was a decrease from November’s reading of 7.1% and below the average estimate of 7.2% from a Reuters survey of economists.
Energy price rises were the lowest since September 2021, reaching 15.1% compared to 18.4% in November, as wholesale gas prices in Europe decreased in recent weeks due to record-breaking temperatures.
The French Minister of Finance, Bruno Le Maire, predicted on France Inter radio that inflation would decrease during 2023. He earlier predicted that inflation would continue elevated through the middle of the year before declining.
In January, regulated gas and electricity prices increased by 15%, which is anticipated to contribute to inflationary pressures in the near future.