French inflation confirmed at 2.1% in July as core prices accelerate
Key Takeaways
- •France's final July CPI was confirmed at 2.1% year-on-year, matching the preliminary estimate and accelerating from June's 1.8% reading.
- •Core annual inflation rose to 1.3% in July from 1.0% in June, with services inflation increasing to 2.2% from 1.9%.
- •Energy inflation climbed to 12.6%, driven by a 17.7% jump in gas prices following the expiry of the French state's gas price shield on 1 July 2025.
- •The harmonised HICP reading of 2.4% was also confirmed, up from 2.0% in the prior month.
- •As the euro area's second-largest economy, France's firmer readings feed into the inflation measure the ECB steers toward its 2% medium-term target, keeping policymakers watchful.
July final CPI: +2.1% year-on-year, in line with the preliminary estimate of +2.1%
Prior reading: +1.8%
July final HICP: +2.4% year-on-year, matching the preliminary estimate of +2.4%
Prior reading: +2.0%
French headline annual inflation was confirmed at 2.1% in July, reflecting a renewed, broad-based pickup in price pressures. Core annual inflation also accelerated, rising to 1.3% in July from 1.0% in June. As the euro area's second-largest economy, France carries meaningful weight in the bloc-wide inflation measure that the ECB steers toward its 2% medium-term target, so firmer national readings feed directly into the eurozone picture policymakers assess.
The headline figure was amplified by another jump in energy price inflation, which climbed to 12.6% in July after an 11.0% estimate in June — a level that remains elevated. Much of July's increase stemmed from a sharp rise in gas prices, up 17.7% compared with the June estimate of +10.4%. The timing coincides with the expiry on 1 July 2025 of the French state's gas price shield, which had held household bills below market levels.
Services inflation also increased, reaching 2.2% in July from 1.9% in the previous month. Food price inflation edged up to 1.0% from 0.9%.
The HICP (Harmonised Index of Consumer Prices) is the inflation measure harmonised across EU member states for comparison purposes; the CPI is the national measure compiled by INSEE, the French statistics office.
Overall, the stickier services inflation component continues to drive core prices higher — a dynamic that will keep the ECB watchful, especially if the trend persists after the summer. Services costs have been a recurring focal point for ECB policymakers given their link to domestic wage dynamics, and coming national and eurozone-wide releases will show whether July's pickup was a one-off or part of a broader trend.
Source: ForexLive
