Retail

French Inflation Slows Unexpectedly In December

By Dayeeta Das
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Inflation in France unexpectedly edged lower in December from a record high a month earlier, helped by slowing energy price rises, official data showed on Wednesday, offering hope the worst of the inflation crisis may be over.

The inflation rate fell to 6.7% in December, according to preliminary EU-harmonised data from the national statistics office INSEE.

That was down from 7.1% in November and below the average forecast for 7.2% in a Reuters poll of economists' expectations.

Energy prices increased 15.1% compared with 18.4% in November as wholesale gas prices fell across Europe in recent weeks amid record high temperatures.

Finance minister Bruno Le Maire told France Inter radio that inflation would see a downward trend over the course of 2023. He has previously said inflation would remain high until mid-year before falling back.

Energy Prices

In the short term, energy prices are likely to add to inflation pressures in January as regulated gas and power prices rose by 15% at the start of the year.

"Nonetheless, the favourable moves in energy prices suggest there may be light at the end of the tunnel," said economist Sylvain Bersinger with consultancy Asteres.

While France has so far kept inflation lower than in other EU countries thanks to limited increases in regulated gas and power prices, the hit to consumers' purchasing power is nonetheless eroding household confidence.

Consumer Confidence

INSEE said in a separate report on Wednesday that its consumer confidence index fell marginally last month to 82 from 83 in November, well below the long-term average of 100.

While INSEE's monthly survey showed households' concerns about unemployment, their finances and inflation on the rise, dwindling purchasing power is also sparking social tensions.

The yellow vest anti-government movement, which has largely been dormant since large-scale violent street protests in late 2018, plans to hold a demonstration in Paris on Saturday.

News by Reuters, edited by by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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