France inflation reaches its highest in decades

Consumer prices in France have reached their highest level in over three decades, data from state statistics agency INSEE showed on Wednesday.

According to the report, inflation in the country rose 0.9% mom in June, pushing annual inflation to 6.5%, the highest level since 1991. The figures marked the second consecutive record month for inflation since France Calculation methods used by the EU in the early 1990s.

The country’s national consumer price index also rose 5.8% year-on-year from 5.2% in May.

INSEE pointed out that inflation was mainly driven by rising energy prices, which have risen by 33.1% annually. The data also showed that the cost of services rose 3.3% year over year.

Both the French government and the central bank have lowered their economic growth forecasts for this year. Bank of France Governor Francois Villeroy de Galhau told Radio France Info on Wednesday that stagflation in the country could not be ruled out. The regulator’s main scenario still calls for growth of 2.3% for all of 2022.

Finance Minister Bruno Le Maire has warned that the state is running out of fiscal space to offset rising energy prices for businesses and households.