France experiences highest inflation in 30 years

France is experiencing the highest rate of inflation in over three decades. The state statistics authority sees the reason for this primarily in the increased energy costs, which have also driven up consumer prices.

Consumer prices in France have reached their highest level in more than three decades, data from the state statistics agency INSEE showed on Wednesday.

According to the report, inflation in France rose 0.9 percent month-on-month in June, pushing the annual inflation rate to 6.5 percent. This is the highest level since 1991. The figures mark the second consecutive record month of price increases since France began using EU calculation methods in the early 1990s.

The country's national consumer price index was also 5.8 percent year-on-year, compared with 5.2 percent in May.

According to INSEE, inflation was mainly driven by the sharp rise in energy prices, which rose by 33.1 percent year-on-year. The data also showed that the cost of services rose 3.3 percent year-on-year.

Both the French government and the central bank have lowered their forecasts for economic growth this year. The governor of France's central bank, François Villeroy de Galhau, told radio station France Info on Wednesday that stagflation in the country could not be ruled out. The regulator's main scenario continues to be growth of 2.3 percent for all of 2022.

Finance Minister Bruno Le Maire had already warned that the state was running out of fiscal leeway to compensate for rising energy prices for companies and households. Last week, the government in Paris discussed a further cap on electricity and gas prices, fuel subsidies for working people, a rent cap and an increase in pensions and social benefits.

According to the finance minister, France has already spent 23 billion euros since 2021 in the fight against rising prices and the cost of living. According to Le Maire, the focus was primarily on limiting electricity and gas tariffs for consumers.