By Joshua Kirby
French inflation fell to its lowest rate in two years in January, in a boost to Europe-wide efforts to cool prices rises at the start of the year.
The country’s consumer-price index, a measure of an ample basket of goods and services, rose by 3.1% from the same month last year, falling from a 3.7% rise in December, according to provisional numbers set out Wednesday by national statistics agency Insee.
This was lower than economists’ expectations for a 3.4% increase, according to a poll compiled by The Wall Street Journal, and takes the rate to its lowest level since January 2022, when it stood at 2.9%. Escalation of conflict between Russia and Ukraine that year subsequently led to a sustained spike in inflation across Europe, driven especially by higher prices for energy as imports of Russian gas were halted.
January’s fall in inflation was due to sharply slowing energy prices–which had led to a spike in overall prices in December–as well as for food and manufactured goods. Services prices, another important driver of inflation, conversely picked up pace a little. This points to “continued stickiness in this component,” which is increasing in weight, said Melanie Debono, senior Europe economist at Pantheon Macroeconomics, in a note.
The result offers a fillip to the European Central Bank in its battle to bring down inflation across the eurozone in the opening months of 2024, ahead of any potential cuts to interest rates later in the year. Earlier this week, Spain raised concerns by reporting an unexpected uptick in its own consumer prices amid higher electricity bills in January. Combined, the figures for France and Spain suggest eurozone inflation should fall to 2.4% in January, Debono said.
Inflation figures for the eurozone are due to be reported Thursday, with economists’ consensus forecasting a slight easing in price rises. The ECB expects inflation to ease to an average 2.7% over the course of 2024 in the 20-member euro bloc, implying that a 2% target would be reached later in the year.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
