According to official data from France, the country’s inflation rate has slowed to its lowest level in two and a half years. In March, the annual inflation rate was recorded at 3.2 percent. Month-on-month inflation recorded 3.0 percent in February.
The French statistical office, INSEE, stated that this 3.2 percent inflation rate is the lowest since September 2021, when it was 2.2 percent. They explained that the annual decline reflects slower growth in the prices of food, services, tobacco, energy, and manufactured products.
Read more: Eurozone inflation drops to four-month low of 2.4 percent in March 2024
Specifically, food inflation significantly decreased from 3.6 percent down to 1.7 percent. Energy prices rose by 3.4 percent, which is still much lower than the 4.3 percent increase seen in February. The growth rate of manufactured product prices also dropped, from 4.0 percent in February down to 1.0 percent. Service costs increased by 3.0 percent, up from 2.3 percent the previous month.
Overall, these figures indicate a slowdown in the rate of inflation in France, reaching the lowest level since the latter half of 2021.
In its February 2024 forecast, the European Union (EU) projected France’s GDP to have grown by 0.9 percent in 2023. This growth was driven primarily by strong economic performance in the second quarter. However, this figure was marginally below the Autumn 2023 Forecast.
According to the EU, high inflation and tighter financial conditions weighed on growth throughout the year, despite government support measures and a very favorable labor market. Dynamic wage growth helped preserve households’ purchasing power.Â
Meanwhile, the EU noted that net exports contributed positively to growth. This was fueled mostly by a decrease in imports of goods, as the growth of domestic demand was limited.
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