French inflation revised higher to 0.9% as service costs rise

French Inflation Adjusted Upward to 0.9% Amid Rising Service Costs

Overview of French Inflation Trends

(Reuters) -French consumer prices rose more than initially estimated in June, confirming a broader euro zone trend of gradually rising inflation as service costs accelerate and declines in energy price moderate.

France's harmonized inflation rate, adjusted for comparison with other euro zone countries, was revised up to 0.9% year-on-year in June from a preliminary reading of 0.8%, statistics office INSEE said on Friday. That was up from 0.6% in May.

A Reuters poll of 15 analysts had forecast 0.8% for harmonized inflation, with estimates ranging from 0.8% to 0.9%.

Service Price Increases

The uptick was driven by accelerating service prices, which rose 2.4% annually in June versus 2.1% in May. INSEE attributed this to faster growth in accommodation, transport and healthcare costs.

Energy prices fell 6.7% compared to June 2024, a smaller decline than May's 8.0% drop.

Energy Price Declines

Core inflation, excluding volatile food and energy prices, edged up to 1.2% from 1.1%, while food price inflation accelerated slightly to 1.4% from 1.3%.

The domestic consumer price index climbed 1.0% annually.

The slight increase aligns France with the broader euro zone, where inflation reached the European Central Bank's 2% target in June.

Despite this rise, France continues to record one of the lowest inflation rates in the 20-nation bloc.

Core Inflation Insights

The ECB cut interest rates in June after inflation fell just below its target, with President Christine Lagarde signalling a potential break with further policy easing.

However, persistent service price pressures across the euro zone have raised concerns about domestic inflation becoming entrenched above target levels.

(Reporting by Gianluca Lo Nostro; Editing by Milla Nissi-Prussak)