French inflation jumps to 3% in September
According to the national statistics office, the rise in inflation was largely due to a surge in energy and fuel costs, which were up 21.2%.
In September, French inflation surged to 3.0% year-on-year, a noticeable jump from 2.4% in the previous month, according to the latest figures from Insee. The rate surpassed both market predictions and Insee's own estimate of 2.9% from two weeks ago. The harmonized consumer prices index surged to 3.4% from 2.6% in the prior month.
A significant factor in this inflation spike was the sharp rise in energy costs, which climbed 21.2% year-on-year compared to 16.7% in August. France has refrained from applying widespread cuts in fuel taxes or prices, instead relying on targeted assistance that does not directly lower the measured inflation. Consequently, global oil price hikes have had a more direct impact on French consumer prices.
Inflation in the services sector rose to 2.2% from 1.9%, while food prices increased to 1.5% from 1.1%. The cost of fresh food surged 9.9% year-on-year, up from 5.9% in August. In contrast, the price of manufactured goods fell by 0.3%, reversing a 0.4% decline in the previous month. Household spending on goods fell by 0.5% in volume terms, reversing the 0.4% increase from the month before.
Energy and food consumption both declined, with energy use dropping 2.3% and food consumption decreasing 0.4%. Nonetheless, purchases of manufactured goods rose by 0.3%. Year-on-year, household consumption of goods climbed by 0.8%. As of the second quarter, French public debt stood at €3,595.5bn, equivalent to 119% of GDP, an increase from 117.5% three months earlier.
The French government anticipates this debt will rise to 121.7% of GDP by 2027. The yield on the 10-year French government bond has recently reached around 4.8%, with the spread over the German Bund expanding to about 120 basis points, a significant increase from 62 basis points at the start of June. The government predicts interest expenditure will rise to €91bn in 2027 from €79bn this year.
The French Treasury has warned that France will need to borrow €340bn in 2027, including €189bn to repay maturing debt.
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