French inflation holds steady, raising hopes for further rate cuts

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French inflation holds steady, raising hopes for further rate cuts

Prices in France increased at a steady rate at the start of the year, said the country’s statistics agency INSEE on Friday.

The nation’s harmonised inflation rate - adjusted for comparison with other eurozone countries - came in at 1.8% year-on-year in January.

That’s the same figure seen in December, remaining under the European Central Bank’s (ECB's) 2% target.

The new inflation data comes after the ECB cut its key interest rate by 25 basis points on Thursday.

Speaking about the decision, EBC President Christine Lagarde noted that the disinflationary process was ““well on track”, nonetheless adding that “the economy is still facing headwinds”.

Consumer confidence is fragile, the eurozone’s growth is flat, and potential tariffs from the new US administration pose uncertainty for Europe’s inflationary trajectory.

France’s consumer price index (CPI), not harmonised for country comparison, rose by 1.4% year-on-year in January - following a reading of 1.3% in December.

Month-on-month, CPI fell by 0.1% due to a drop in the cost of winter clothing, footwear and transport.

Monthly price rises were seen, meanwhile, for energy, food, tobacco, and insurance products.

The steady inflation data provides a spot of relief for the French government, currently embroiled in a budgetary crisis.

Tasked with tackling a steep economic deficit, Prime Minister François Bayrou has recently presented a financing bill for this year.

He will face a no-confidence vote in the National Assembly next week as lawmakers decide whether to back the measures.

Elsewhere in the eurozone, Germany will publish new inflation data later on Friday.

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