With 2.3% inflation in 2024, France is one of the good students in the euro zone, where inflation is on average around 2.4%, according to the harmonized consumer price index (HICP). ) published Friday January 17.
The HICP, calculated from data transmitted by INSEE, allows comparisons to be made between European countries. It differs a little from the index usually used in France. This indicator shows that in 2024, the general increase in the prices of goods and services is most marked in Romania (5.8%), or even in Belgium (4.3%) and the lowest in Lithuania and in Finland (0.9 and 1.1%).
The leading European economic power, Germany, recorded inflation of 2.5%, Spain 2.9%, and almost as much as Greece (3%).
Agricultural power and energy price control
After a year of 2022 at 5.9% inflation and a year of 2023 at 5.2%, according to Eurostat, the sharp decline in French inflation in 2024, which is approaching the 2% mark, is mainly explained due to the lull in food prices. The latter have in fact only increased by 1.4% in 2024, according to INSEE. Far from the 11.8% increase recorded the previous year.
In this sector, France has advantages compared to other European countries. As an agricultural power, the country relies less on imports and is less subject to international pressure on prices. On the other hand, “French mass distribution is stronger than elsewhere, which makes it possible to negotiate lower prices” for consumers, notes Anthony Morlet-Lavidalie, economist for Rexecode.
Energy prices are another key component of inflation in the Eurozone. However, in this area, France “made much greater use of energy price control tools, as well as rents, which were able to slow down the transmission of the inflation shock”, comments Fabien Bossy, chief economist France at Société Générale CIB.
-The price shield on gas and electricity put in place at the end of 2021 and extended to 2024 has helped to contain the rise in energy prices, which has more severely penalized neighboring countries. Even if the end of this price shield is scheduled for February 1, the decline in prices on the markets should still allow the French's electricity bill to fall.
When certain “weaknesses” become strengths
The stable level of wages in France, which increases less quickly than in other European countries, would also have been an advantage in not adding fuel to the mill of inflation according to analysts. France indeed knows “a lower rise in wages than in the rest of the euro zone”underlines economist Anthony Morlet-Lavidalie. In comparison, in Germany, salaries “were very low over the last ten or fifteen years and are currently catching up” which drives up the country's inflation.
Furthermore, France is one of the most deindustrialized countries in Europe and would therefore have been less able to pass on the rise in raw material prices to manufactured products. “In a sector like automobiles, for example, prices have risen much more in Germany, because these are more high-end products”explains Anthony Morlet-Lavidalie. “France specializes in a few goods; aeronautics, luxury, a little pharmacy, but for the rest, heavy chemicals or metallurgy for example, we have much less capacity to raise prices”continues the Rexecode economist.
Furthermore, but this concerns all European countries, after two years at high levels, notably due to the outbreak of the war in Ukraine, the prices of raw materials (energy, metals, etc.) have calmed down in 2024, which has reduces the production costs of manufactured goods, and therefore their prices. Over one year, in 2024, the consumer price index for manufactured products fell by 1.4% in France.
