Inflation in France remains strikingly low compared with the rest of Europe, according to official data released January 6.
The gap is largely explained by France’s subdued wage growth and cheaper energy.
Thanks to its 57 nuclear reactors, providing three-quarters of the country’s electricity, prices have remained lower than in countries more exposed to gas markets.
This advantage, sometimes described by French media as a “nuclear premium”, has limited cost pressures for households and businesses.
In December, French inflation was just 0.8 per cent higher than a year earlier, said France’s statistical office Insee.
Inflation has been hovering below 1 per cent for several months, after already falling sharply from peaks seen in 2022 and 2023.
This puts France among the lowest-inflation countries in the eurozone. In December, only Cyprus recorded a lower rate, while the eurozone average stood at around 2.1 per cent — more than double France’s figure.
According to Charlotte de Montpellier, economist at ING specialising in France, energy prices played a decisive role.
“Low French inflation in recent months is mainly due to weak energy inflation, linked to regulated gas tariffs,” she told Brussels Signal on January 6.
Political uncertainty added to keeping inflation low.
“French political uncertainty is weighing on activity, which is growing more slowly than in other European countries, and that translates into less dynamic service prices,” de Montpellier said.
Gas prices for households fell sharply over the past year, dragging energy inflation deep into negative territory.
“Gas prices for households fell by 11 per cent year on year in February, which led energy inflation to minus 6.8 per cent in December,” she explained.
The decline in energy prices has been stronger in France than elsewhere in Europe, explaining why inflation has fallen faster than in neighbouring countries.
France’s electricity mix has reinforced the trend.
Lower energy costs have reduced inflation indirectly.
With cheaper electricity and gas, French companies, particularly in industry, have faced less pressure to raise prices than competitors in countries more dependent on gas, where higher energy costs have fed through to consumer prices.
Energy is not the only explanation. Wage growth in France has also slowed sharply since the inflation surge of 2022 and 2023.
Insee data show salaries rose by just under 2 per cent year on year in the third quarter of 2025, well below previous years.
By comparison, average wage growth reached around 4 per cent in 2023 and 3 per cent in 2024. The slowdown has weighed on inflation, particularly in services.
“Underlying inflation has increased more slowly in France since the end of the summer, notably because service prices have risen less quickly,” de Montpellier said.
In its Salary Budget Planning study published in July, consultancy WTW also reported a clear contraction in wage increase budgets in 2025.
The median budget for pay rises fell from around 4 per cent in 2024 to about 2.5 per cent this year.
WTW said salary increases over the past three years failed to offset inflation recorded between 2022 and 2024, resulting in a loss of purchasing power for many employees.
Companies cited economic uncertainty as the main reason for restraint.
Forty-two per cent of firms reported financial results below expectations, while others pointed to cost-control policies aimed at remaining competitive, according to WTW.
The return of lower inflation has also reduced pressure on employers.
After inflation peaks of 5.2 per cent in 2022 and 4.9 per cent in 2023, price growth fell to around 2 per cent in 2024 and is expected to have remained just above 1 per cent in 2025.
Food prices have also risen less than in neighbouring countries.
France’s relatively strong domestic agricultural production has limited imported food inflation, Simon-Pierre Sengayrac, co-director of the Observatory of the Economy at the Jean-Jaurès Foundation, told Ouest France in September.
He also pointed to farming practices that are less energy-intensive than elsewhere in Europe.
After raising prices during the inflation surge of 2022 and 2023, large retailers have since pushed prices down again to win back customers, reported Ouest France.
