Inflation unexpectedly remained at a record high in November, defying a slowdown in other parts of the euro zone and weakening calls for the European Central Bank to slow the pace of interest rate increases.
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Consumer prices in the currency bloc's second-largest economy increased by 7.1% from a year earlier, matching October's increase, Insee said Wednesday. Analysts surveyed by Bloomberg had predicted a 7% rise.
The French report follows softer inflation readings Tuesday for Belgium, Spain and Germany. The data for the 19 member euro zone is due later Wednesday, with economists saying that there is a slight moderation of the first in 2 years.
That will give the European Central Bank policymakers a last update on prices before they have to decide on December 15 how much borrowing costs will be lifted to help wrest record price gains back to the 2% target.
At the last two meetings, officials have opted for back-to- back hikes of 75 basis points. The question is whether they will slow down that momentum to a half point, especially as the continent teeters on the brink of a recession.
There is no consensus on doing so. ECB President Christine Lagarde said on Monday that she d be surprised if inflation has peaked, while Executive Board member Isabel Schnabel said recently that it may be too early to slow down.
The strength of core inflation, a measure that strips out energy and food prices, may give hawkish policymakers an argument to stick to big increments when raising rates. Even as the headline number dips, economists believe that reading will be stable at 5% in November.
France showed an increase in price gains for food and manufactured goods, while energy costs for households decreased, even as the government reduced a discount on diesel and gasoline. The price of services went up 3% on the year, slightly less than the 3.1% seen in October.
In a separate release from Insee showed that rising prices hurt consumers, who cut back on outlays for energy, manufactured goods and food in October. The household spending fell by 2.8% - the biggest month-on-month decline since April 2021. Analysts surveyed by Bloomberg had predicted a decline of 1%.
With help from Joel Rinneby and Ainhoa Goyeneche.
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