France is standing out from the gang, different main European economies together with Germany and Spain reported greater inflation for February.
Pushed by a drop in electrical energy costs, the buyer value index fell to 0.8% in February, after +1.7% in January, in keeping with a flash estimate by French statistics workplace Insee. On a month-to-month foundation, costs haven’t modified in France.
The EU harmonised index is simply barely greater, 0.9% for February in contrast with final yr.
The slowdown in inflation within the EU’s second-biggest economic system is fuelling additional expectations that the European Central Financial institution (ECB) will lower the deposit price by one other 25 foundation factors to 2.5% subsequent week.
The very low inflation in February 2025, the bottom since February 2021, is defined particularly by the autumn in electrical energy costs”, mentioned chief economist Sylvain Bersinger from Paris-based financial advisor Asterès.
After two years of successive will increase, a mean fall of 15% in electrical energy costs took impact on 1 February for greater than 24 million subscribers. The power inflation sat at -5.7% in February in contrast with final yr.
However, meals costs elevated barely over one yr, in contrast to service costs which slowed. Manufactured merchandise and tobacco additionally slowed down however to a lesser extent.
“Within the coming months and quarters, inflation shouldn’t be anticipated to stay at such a low degree as a consequence of barely inflationary developments within the manufacturing chain,” mentioned Bersinger including that “inflation is predicted to rise barely in spring 2025, whereas remaining beneath 2%.”
He expects industrial manufacturing costs to begin climbing after displaying no change in January 2025, and an extra rise in agricultural manufacturing costs.
Bersinger maintained: “the slowdown in wage development will stop inflation from rebounding sharply. Whereas wages had elevated by greater than 5% year-on-year within the fourth quarter of 2022, the rise was solely 2.1% within the fourth quarter of 2024. This improvement, anticipated because of the fall in inflation, will restrict the rise in enterprise prices, and due to this fact the rise in costs”.
Main EU economies are going through completely different inflation tendencies
French inflation figures in February stand out from different European nations. In Spain, inflation climbed to 2.9% over one yr this month.
In Germany, the EU-harmonised inflation was 2.8%, unchanged for the third consecutive month, in keeping with the Federal Statistical Workplace Destatis. On a month-to-month foundation, costs elevated by 0.6%, the EU-harmonised index confirmed.
In Italy costs jumped by 1.7% in contrast with final yr, in keeping with the Italian Statistics Workplace ISTAT’s preliminary estimates, which is the very best inflation price since September 2023.
Italian costs elevated by 0.2% in a month-to-month comparability, the EU harmonised price was 0.1%
Eire has additionally reported its newest inflation figures, which confirmed a subdued value strain within the nation. In a month-to-month comparability, costs elevated by 0.7% in February from -0.7% within the earlier month, in keeping with the EU harmonised figures. Annual inflation got here in at 1.3% as in contrast with 1.7% in January.
It’s not solely inflation that slowed down in France, however the economic system too
On a quarter-by-quarter foundation, the French economic system contracted by 0.1% within the final three months of 2024, confirming Insee’s preliminary estimates. This compares to an growth of 0.4% within the earlier three months which was partly because of the Paris Olympic and Paralympic Video games boosting development.
Within the final three months of 2024, family consumption development slowed to +0.3%, and this pattern continued in January 2025 too in keeping with separate knowledge by Insee, displaying a drop of 0.5% month-on-month.
The French GDP was additionally dragged down on the finish of final yr by the declining numbers of fastened funding led by a drop in development funding.
Exports and imports each rose by 0.4%.
On an annual foundation, the economic system expanded by 0.6%, barely beneath the flash estimate of 0.7%, marking the slowest yearly development because the final annual contraction on the finish of 2020.
For the total yr of 2024, the French GDP grew by 1.1%, similar to it did within the earlier yr.