Rising energy costs push French inflation to highest level in over two years

Until the end of last year, the year-on-year inflation rate of the eurozone’s major economies had been on a downward trend, with France’s year-on-year inflation rate falling to 0.4% in January. However, after the closure of the Strait of Hormuz led to higher oil and natural gas prices, the inflation rate surged in March. According to EU-harmonized data released by France’s National Institute of Statistics and Economic Studies on Friday, French consumer prices rose by 2.8% year-on-year in May, accelerating from a year-on-year inflation rate of 2.5% in April. This is the highest level since February 2024, pushing it further away from the European Central Bank’s 2% target. Insee stated that the year-on-year energy inflation rate rose to 16.8% in May from 14.3% in April, while service prices increased at a slightly faster pace. Before this acceleration in prices, Insee’s consumer confidence index fell to a three-year low in May, and business sentiment in France also declined.