Prices & purchasing power — France · Synthesis

Inflation back to around 2%. On an annual average, consumer prices rose by around 2.0% in 2024 (INSEE, CPI), after the 2022-2023 peak (up to +5.2% in 2022, +4.9% in 2023). Measured by the European harmonized index (HICP), French inflation in 2024 comes out at around 2.3% (Eurostat). The decline is clear, but it is a disinflation (prices rising more slowly), not a fall in the price level.

Energy and food: drivers of the shock, now stabilized. The 2022-2023 surge was pulled by energy and then by food (double-digit increases at the height of the crisis). In 2024, energy prices eased and the rise in food prices slowed sharply (INSEE). The level of prices of these items nonetheless remains far higher than that of 2021 — which explains the gap between disinflation statistics and household perception.

Core inflation and diffusion. Core inflation (excluding energy and fresh food, excluding public tariffs) receded more slowly than headline inflation, a sign of diffusion to services and wages. Banque de France tracks this second-round dynamic; its decline conditions the durable return to the ECB's 2% target.

Wages and minima: partial indexation. The minimum wage (SMIC), automatically revalued (inflation of the 20% most modest households), stands at around €1,800 gross monthly (≈ €1,426 net) after the successive increases of 2022-2024. The average wage per head has risen, but the catch-up in the purchasing power of real wages after the inflationary episode remains partial and uneven across sectors (DARES, Banque de France).

Purchasing power and saving. The purchasing power of households' gross disposable income, eroded in 2022, broadly rose again in 2024 as inflation slowed (INSEE). The saving rate remains high (around 17-18%), above its pre-Covid level — a precautionary behaviour in a climate of uncertainty.

A return towards the 2% target, to be confirmed. Institutions (Banque de France, INSEE, ECB) anticipate inflation close to the target in the short term — an analytical horizon and not realized data. The hazards lie in energy prices, geopolitical tensions and the pass-through of wages to service prices.

The end of the price shields, a technical factor. The progressive winding-down of the capping schemes (tariff shield, rebates) and the adjustments to energy taxation have calendar effects on the index. These measures smoothed the shock in 2022-2023; their exit mechanically weighs on measured inflation in certain years.

Purchasing power, a central political issue. The rebuilding of purchasing power depends on the pace of wages, taxation and the evolution of the prices of essential goods (food, housing, energy). It is one of the main markers of public debate, closely tracked by INSEE and the research institutes.

Housing and rents. The reference rent index (IRL), whose increase has been capped, and property prices (cf. Housing category) constitute a heavy component of household budgets. Their trajectory weighs directly on residual purchasing power, especially for tenants in tight zones.

The open questions. Three issues will shape the period: (1) durably anchoring inflation around 2% without a new external shock; (2) rebuilding purchasing power through real wages rather than through public debt; (3) containing the prices of constrained spending (energy, housing, food) which weigh most on modest households.

Placed in its environment, France experienced a somewhat more moderate inflationary shock than the European average, thanks in particular to the tariff shields and the weight of nuclear power in its electricity — at the cost of budgetary support (cf. Economy category).

Three takeaways. (1) A more contained peak. At the height of the crisis (2022-2023), French inflation stayed below that of Germany, Italy and the euro-area average, partly thanks to the energy shield and an electricity mix little exposed to gas.

(2) A convergence in 2024. The gaps have narrowed: 2024 inflation is close between France (≈ 2.3% HICP), Germany (≈ 2.5%), the United Kingdom (≈ 2.5%) and the EU average (≈ 2.6%), while Italy has fallen back markedly lower (≈ 1.1%).

(3) The cost of the shield. The lower inflation has a counterpart: a significant budgetary cost of the support measures, which feeds the debate on public finances. France's price moderation is therefore not only structural, it has been partly financed.