In January, France's consumer price inflation hit its lowest point in two years due to a significant drop in inflationary pressures relating to food, energy, and manufactured goods. The Consumer Price Index slowed to 3.1% from December's 3.7%, according to preliminary data released by the French National Institute of Statistics and Economic Studies (INSEE). This marks the lowest inflation rate since January 2022.
The current deceleration reflects changes in the prices of energy, food, and manufactured goods. Particularly, food price inflation dropped to 5.7% from 7.2%, and the increase in energy prices sharply slowed to 1.8% from 5.7%. The growth of manufactured product prices also decreased to 0.7% from 1.4%.
Contrarily, a faster growth of 3.2% was registered in service costs, succeeding a 3.1% increase. Additionally, EU harmonized inflation showed a softened rate in January, decreasing to 3.4% from December's 4.1%, just slightly above the projected forecast of 3.3%.
When examined on a monthly basis, both consumer prices and the Harmonized Index of Consumer Prices (HICP) dropped by 0.2%, contrasting with the 0.1% rise seen in December.
According to Charlotte de Montpellier, an economist at ING, inflation is expected to remain near 3.0% for the beginning of the year before gradually declining towards 2% in the second half. She also predicted that inflation could hover close to 2.5% for the full year.
Another INSEE report indicated that producer prices in the domestic market fell 0.9% annually, following a rise of 0.3% in November. These prices were 32% higher than their average level in 2021. In a month-on-month comparison, producer prices experienced a slight increase of 0.1%, following a 2.3% rise in November.
