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.

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 came into 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.

“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.

On the other hand, “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