French inflation slows to 5.9% in December

According to an estimate published by Insee on Wednesday, inflation in France slowed in December 2022, driven by falling oil, electricity and gas prices. The lull is likely to be short-lived, however, with inflation expected to peak in the first two months of 2023.

A slowdown due to lower energy prices

In December, consumer prices in France rose by 5.9% year-on-year, compared with 6.2% in November, according to the latest Insee estimate. This slowdown had not been anticipated, with Insee initially forecasting a 6.6% year-on-year rise in the consumer price index by the end of 2022.

The Harmonized Index of Consumer Prices (HICP), which compares the situation with other European countries, rose by 6.7% year-on-year in December, compared with +7.1% in November.

This slowdown in inflation is due to the fall in oil prices, but also to the decline in gas and electricity prices, due to high stock levels and favorable weather conditions which reduced demand. The decline in energy prices offset the continuing sharp rise in food prices, which rose by 12.1%. Prices for manufactured goods and services rose by a more limited 4.6% and 2.9% respectively.

French inflation slows to 5.9% in December


Inflation peaks in January and February

Despite the slowdown recorded in December, France is now posting higher inflation than other eurozone countries, after having long been distinguished by a more restrained rise than most of its neighbors. In particular, it has fallen behind Spain, which is limited to an increase of 5.8% according to the HICP, compared with +6.7% for France.

And the situation is not about to improve in France, with inflation expected to peak in January and February, while several other European countries seem to have passed this point.

According to Insee projections, price rises could reach 7% in early 2023, due to the disappearance of two government schemes:

  • on the one hand, the tariff shield, which until now limited energy price rises to 4%, has allowed an increase of 15% since January 1;
  • on the other hand, the 10 euro cent discount per liter of fuel has also ended, as has the additional 10 cent discount at TotalEnergies stations.

" We expect inflation to fall during 2023," said French Finance Minister Bruno Le Maire on France Inter on Wednesday (10 min 50).



This fall should begin to take hold from March onwards. According to Insee, inflation should be 5.5% in June.

The European Central Bank is expected to raise rates again in 2023, to around 3.4%. This increase is still lower than that of the US Federal Reserve, whose rates, negative before March, reached 4.25% and 4.50% in December.