Inflation in France hits its lowest level in four years in February

Driven by a drop in electricity prices, the consumer price index fell to 0.8% in February, after +1.7% in January, according to a flash estimate by French statistics office Insee. On a monthly basis, prices haven’t changed in France.

The EU harmonised index is only slightly higher, 0.9% for February compared with last year.

The slowdown in inflation in the EU’s second-biggest economy is fuelling further expectations that the European Central Bank (ECB) will cut the deposit rate by another 25 basis points to 2.5% next week.

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The very low inflation in February 2025, the lowest since February 2021, is explained in particular by the fall in electricity prices”, said chief economist Sylvain Bersinger from Paris-based economic consultant Asterès.

After two years of successive increases, an average fall of 15% in electricity prices took effect on 1 February for more than 24 million subscribers. The energy inflation sat at -5.7% in February compared with last year.

On the other hand, food prices increased slightly over one year, unlike service prices which slowed. Manufactured products and tobacco also slowed down but to a lesser extent.

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“In the coming months and quarters, inflation is not expected to remain at such a low level due to slightly inflationary developments in the production chain,” said Bersinger adding that “inflation is expected to rise slightly in spring 2025, while remaining below 2%.”

He expects industrial production prices to start climbing after showing no change in January 2025, and a further rise in agricultural production prices.

Bersinger maintained: “the slowdown in wage growth will prevent inflation from rebounding sharply. While wages had increased by more than 5% year-on-year in the fourth quarter of 2022, the increase was only 2.1% in the fourth quarter of 2024. This development, expected due to the fall in inflation, will limit the rise in business costs, and therefore the rise in prices”.

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French inflation figures in February stand out from other European countries. In Spain, inflation climbed to 2.9% over one year this month.

In Germany, the EU-harmonised inflation was 2.8%, unchanged for the third consecutive month, according to the Federal Statistical Office Destatis. On a monthly basis, prices increased by 0.6%, the EU-harmonised index showed.