The French CPI shows 0.9% average annual rate for 2025, after 2% in 2024. This clear slowdown validates the disinflation trajectory that Insee anticipated as early as its December 2024 economic note, where the institute forecasted inflation slightly below 2%. Here, we analyze the components of this decline, the divergences between measured inflation and perceived inflation, and what the available projections indicate for 2026.
Underlying inflation and services: the tension point that public summaries overlook
The annual change in the CPI in December 2025 stands at 0.8%, with a monthly variation of +0.1%. Behind this low figure, underlying inflation remains slightly upward trending towards the end of the year. This gap between the overall index, pulled down by energy, and the underlying index, supported by services, is the real signal to watch.
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Healthcare service prices accelerated in 2025, while communication services continued their decline. Housing services and “other services” are slowing down but remain above the pre-2022 trajectory. We observe that this rigidity in service prices, linked to delayed wage increases, largely explains why Insee’s economic note pointed to a growing role of services in underlying inflation for 2025.
For those wishing to delve deeper into the analysis of the 2025 inflation rate in France according to Insee, the detailed data by consumption category confirms this dual reading.
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Sectoral breakdown of the CPI 2025: energy, food, manufactured goods
Three categories have driven the overall decline:
- Energy shows a more pronounced year-on-year decrease in December 2025. This decline is the main factor compressing the overall index, well beyond its weighting in the basket.
- Food continues to slow down after the shock of 2022-2023. Food prices have only risen slightly on an annual average, with occasional drops in certain fresh products.
- Manufactured goods register a slight price decrease in 2025, a rare phenomenon reflecting imported competitive pressure and a softening of domestic demand.
Energy and food account for most of the drop from 2% to 0.9% between 2024 and 2025. Removing these two categories from the calculation would bring disinflation to a much more modest movement.
French companies’ inflation expectations: a revealing decoupling
French business leaders’ one-year inflation expectations rebounded in early 2026 around 2%, while observed inflation remained close to 1% in February 2026. This decoupling between measured inflation and inflation anticipated by the productive fabric is not trivial: it signals that companies are already incorporating future cost increases into their pricing strategies.
Over a three to five-year horizon, expectations remain remarkably anchored around 2%, with no drift despite recent shocks. This result reinforces the credibility of forecasts for a regime of moderate inflation over 2025-2027, while reminding that companies do not anticipate a sustained maintenance below 1% at all.
For households, the situation is different. Perceived inflation remains higher than measured inflation, a structural gap that Insee has documented for years. Frequently purchased products (food, fuel) weigh more in perception than in the weighted index.
Projections for 2026: the energy shock as a pivot variable
The OFCE projects an inflation rate of 1.8% average annual rate for 2026, driven by a rebound in energy prices linked to the consequences of geopolitical tensions in the Middle East. After a low point of 0.3% year-on-year in January 2026, French inflation would rise between 1.8% and 2.3% for the rest of the year.
According to OFCE’s assessment, the energy shock would contribute to increasing inflation by 0.6 points in 2026. Conversely, the expected decline in energy prices in 2027 would reduce inflation by 0.2 points. The trajectory is therefore not linear but V-shaped, with a marked trough at the end of 2025 – beginning of 2026, followed by a rise towards the ECB target of 2%.
The Bank of France, in its September 2025 projections, had already anticipated a significant drop in inflation in 2025 followed by a gradual rise towards 2% in 2026-2027. Nominal wages would continue to rise more than prices, which supports real purchasing power but fuels the services component of inflation.
France’s position in the eurozone: convergence in sight
France approached 2025 with lower inflation than most major eurozone countries. The harmonized HICP data then shows that the inflation gap with the eurozone average is narrowing: in May 2026, the French HICP reaches 2.8% year-on-year, close to the European average.
This convergence has a direct implication for the ECB’s monetary policy. As long as France was seen as a good student with very low inflation, there could be disagreement on the pace of interest rate cuts. The ongoing realignment reduces this tension, without fundamentally altering the already engaged monetary policy trajectory.
The Insee forecasts for 2025 should therefore be read as a transitional phase. The observed inflation trough does not herald a sustainably low regime, but a conjunctural episode between the end of the post-Covid shock and the rise linked to new tensions on energy prices. French inflation is returning towards its long-term average, not towards zero.