Inflation is at its lowest in 3 years: what to remember from the latest INSEE figures

The consumer price index rose by 1.9% in August over one year in France, a decline that brought the indicator below the symbolic 2% mark for the first time since August 2021, INSEE said on Friday.

After reaching 2.3% over one year in July, inflation calmed down in August due to the “very sharp slowdown in energy prices“, details the National Institute of Statistics and Economic Studies in this provisional estimate, which will have to be confirmed in September.

The cost of energy thus increased by only 0.5% over one year in August 2024, whereas it had jumped by almost 7% a year earlier, “mainly due to (…) the increase in tariffs regulated electricity prices applied as of August 1, 2023”, recall national statisticians.

Food prices also rose by 0.5% year-on-year in August, the same pace as in July, while services – which account for the largest share of the indicator – rose by 3.1% year-on-year, after their price had only risen by 2.6% year-on-year in July.

A revision expected on September 13

At 1.9%, the consumer price index (CPI) has thus fallen below the 2% inflation target pursued by the European Central Bank (ECB), as Germany did on Thursday for the first time since March 2021.

But rather than the CPI, the indicator used by the Central Bank to compare inflation from one European country to another is the harmonized index of consumer prices (HICP), which for its part rose by 2.2% over one year in August (after +2.7% in July), indicates INSEE.

“The main difference between the HICP and the CPI concerns health expenditure: the HICP follows prices net of social security reimbursements while “The CPI follows gross prices,” explains the Institute.

An upward revision of the CPI during the second estimate, expected on September 13, remains possible. In May and June, INSEE had thus revised its first inflation estimate upwards, by 0.1 points.