Consumer prices in France took a surprising dip, offering a welcome respite to wallets feeling the strain. The French statistical office INSEE confirmed that annual consumer inflation in January 2024 slowed to 3.1% from 3.7% in December, a drop that came as a pleasant surprise to many.
The main contributors to this decline were the easing of energy prices, which rose by a modest 1.9% compared to a 5.7% increase in December 2023. Food prices also played a role, with overall food inflation cooling to 5.7% after a 7.2% surge in December. Additionally, prices for manufactured products like clothing and footwear saw a significant decrease, dropping by 1.7% in a monthly comparison, driving the overall decline in consumer prices for the month, as reported by INSEE.
The timing of these price movements coincided with January’s major sales season in France, where discounts are common, particularly in the clothing and footwear sectors. When adjusting for these seasonal effects, prices showed no change compared to the previous months, indicating a stable underlying trend.
The core inflation rate, which excludes food and energy prices and is closely watched by central banks for monetary policy decisions, also decreased year-on-year to +3% in January 2024, down from +3.4% in December.
France is not alone in experiencing a slowdown in consumer price growth. Major economies in the Eurozone, including Germany and Spain, also recorded price drops in January. Eurostat’s first estimates put the annual inflation rate for the euro area at 2.8% in January, down from previous months.
This ongoing moderation in inflation could provide the European Central Bank (ECB) with the leeway to consider reducing its benchmark interest rate, which has remained historically high. Such a move could help bolster the economies of the 20 countries sharing the euro and fend off the looming threat of recession.
(Source: Euro News)
