Key facts
- French consumer prices rose 2.6% year-on-year in August.
- The August inflation rate was below the preliminary reading of 2.7%.
- The Bank of France lowered its 2026 growth forecast to 0.4% from 0.5%.
- The central bank warned that risks remained tilted to the downside due to the conflict in the Middle East.
- The Bank of France forecast inflation would reach 2.3% this year.
- Unemployment was forecast to reach 8.4% by the end of the year.
Consumer prices in France increased by 2.6% year-on-year in August on a European Union-harmonised basis, a slight downward revision from the preliminary estimate of 2.7%. The harmonised inflation rate accelerated from 2.4% in July and reached its highest level since May, primarily driven by rising energy prices.
The Bank of France lowered its 2026 growth forecast to 0.4% from 0.5% previously, citing consumer and business caution due to higher interest rates and uncertainty over energy prices, public finances, and geopolitical tensions. The central bank expects household purchasing power to contract this year before returning to growth in 2027 and 2028.
It forecast inflation would reach 2.3% this year, easing to 1.9% in 2027 and 1.6% in 2028. Unemployment was estimated to reach 8.4% by the end of the year, averaging 8.3% next year before slipping to 8.0% in 2028. A monthly survey of executives suggested the economy was set to grow 0.1% in the third quarter.