Good news: inflation continues to slow in France. Prices increased by 2.2% in April over one year, INSEE said on Wednesday, confirming its first estimate of a slight slowdown in inflation, against a backdrop of a more moderate rise in food prices. After inflation of 2.3% in March, the drop “results from the slowdown over one year in the prices of food (1.2% after 1.7%) and tobacco (9.0% after 10.7% ),” specifies the institute in a press release. The prices of manufactured products even fell slightly, by 0.1% after 0.1% in March. The prices of services, which represent almost half of consumption, increased over one year at the same rate as in March, 3%, according to these final data in line with the provisional figures published at the end of April.
Over one month, however, inflation accelerates to 0.5% (compared to 0.2% in March), indicates INSEE, again confirming its first estimate, a development due in particular to the rise in prices of services (1% , after stability in March). Conversely, “the prices of manufactured products and tobacco are stable” over one month. Over one year, the harmonized consumer price index (HICP, which allows comparisons with other EU countries and is of particular interest to the European Central Bank for its monetary policy) increases by 2.4% in April 2024, as in March, and 0.6% over the month, after 0.2% in March. These figures are also in line with initial estimates.
At its last meeting in April, the ECB considered it “plausible” to start lowering its key rates – currently at their highest – in June if the data confirms the anticipated return of inflation in the euro zone by then to the target of 2%, according to the report published last week. The guardians of the euro expect inflation to return to this target in 2025, after 2.3% in 2024.
“We are gradually emerging from the inflationary crisis and we are going to reverse the rate cycle,” declared the governor of the Bank of France, François Villeroy de Galhau, heard by the Finance Committee of the National Assembly. “There may be short-term variations in inflation in the coming months but we will bring inflation down to 2% by next year at the latest,” he added. “So the time has come to decide on the first cut in short-term rates, in all probability at the beginning of June. Then, the rate of reductions will be decided at each meeting based on European data and forecasts,” he said.
