French consumer prices increased more than previously estimated in June, reflecting a wider trend across the euro zone of gradually rising inflation, driven by higher service costs and a slower

decline in energy prices.

According to official data from France’s statistics office INSEE released on Friday, the country’s harmonized inflation rate — adjusted to align with other euro zone nations — was revised to 0.9% year-on-year in June, up from an initial estimate of 0.8%. This marks an increase from 0.6% recorded in May.

A Reuters survey of 15 analysts had predicted a harmonized inflation rate of 0.8%, with forecasts ranging between 0.8% and 0.9%.

The revision was largely attributed to faster growth in service prices, which climbed 2.4% annually in June compared to 2.1% the previous month. INSEE cited higher costs in accommodation, transport, and healthcare services as key contributors to this increase.

Meanwhile, energy prices dropped by 6.7% from June 2024, a slightly smaller decline than May’s 8.0% decrease.

Core inflation, which excludes volatile items such as food and energy, edged up to 1.2% from 1.1%, while food inflation also ticked higher, reaching 1.4% from 1.3%.

France’s domestic consumer price index rose by 1.0% over the year.

The modest uptick keeps France in line with the broader euro zone, where inflation hit the European Central Bank’s (ECB) 2% target in June. Despite the increase, France continues to post one of the lowest inflation rates among the 20 countries using the euro.

The ECB lowered interest rates in June after inflation briefly dipped below target, though President Christine Lagarde suggested the bank may pause before considering further rate cuts. Still, persistent upward pressure on service prices across the euro zone has raised concerns that domestic inflation could remain stubbornly above target levels. Photo by Avij, Wikimedia commons.