French inflation hits 6.1% in July, highest since 1985

French consumer prices climbed to 6.1% year‑on‑year in July, the strongest pace since July 1985, according to INSEE data [1]. The jump followed a 5.8% rise in June and marked the first time inflation exceeded 6% in more than two decades.

The surge reflects a mix of factors. Energy price growth slowed in August, but price gains for manufactured goods and food accelerated, pushing the headline rate higher [1]. Services inflation also picked up, with year‑over‑year increases of 3.3% in June and 3.9% in July [2]. Meanwhile, energy costs still rose sharply – 33.1% in June and 28.5% in July compared with a year earlier [2].

The European Central Bank, which raised rates for the first time in over a decade in July, faces pressure to act again as inflation spikes across the eurozone. Markets expect another rate hike at the September 8 meeting, with policymakers urged to respond decisively [1].

September data showed a modest pull‑back, with inflation easing to 6.2% from 6.6% in August, contrary to forecasts of a rise to 6.7% [3]. The decline stemmed mainly from weaker energy price inflation, which fell to 17.9% – the lowest in a year – aided by government caps on power and gas prices and lower crude oil costs [3]. Nonetheless, the broader eurozone saw inflation hit a record 10.0% in September, keeping the ECB’s tightening agenda on the table [3].

The episode underscores the fragility of French consumer morale, which slipped in September despite the temporary easing, and highlights the risk that heavy fiscal support for households could fuel future price pressures [3]. With energy and food costs still volatile, the next ECB decision will hinge on whether the current slowdown proves durable or merely a brief respite.