France beating inflation, says minister

Finance chief warns shift to a greener economy is set to amplify future rates

France has tamed the soaring inflation that dented its economy in recent months but may struggle to do so again next time around, the country's finance minister has said.

Bruno Le Maire said the "inflation crisis" that was at its worst late last year, when prices were rising at well over 6 percent compared to the year before, is now almost over. But he warned the nation will likely face even stronger price pressure in the coming months.

"Will we keep the levels of inflation we saw before COVID at the end of this inflation crisis? The answer is no," Le Maire said during an interview with Radio J.

He said future inflation rates will be exacerbated by the government's attempts to relocate industry within France, and by the country's transition toward a green economy.

The Bloomberg news agency said Le Maire has also warned credit will cost more because of increases in borrowing costs introduced by the European Central Bank.

Additionally, the French government's phasing out of fiscal support for households and businesses grappling with the high cost of fuel will add to inflationary pressures.

Back in November, France's National Institute of Statistics and Economic Studies, or INSEE, put Consumer Price Index, or CPI, inflation at 6.2 percent. Business leaders said the median inflation rate during the fourth quarter of 2022 might even have passed 6.5 percent.

France is expected to announce later this week inflation is now around 5.4 percent, which would be the lowest rate for more than a year, and it could even be as low as 4.6 percent.

"We are winning the battle against inflation," Le Maire said. "It was difficult and involved choices that were difficult (to) bear."

Inflation has also been high in many other European nations, triggered by food and fuel shortages attributed to the Russia-Ukraine conflict and supply-chain issues blamed on the COVID-19 pandemic.

While prices have been rising quickly, wages have failed to keep up, leaving workers with less money in their pockets — a situation known as a cost-of-living crisis.

Inflation in the United Kingdom has stayed stubbornly high and is currently running at 8.7 percent.

Italy has been among the European Union's nations with the highest inflation rates, with prices going up by 7.6 percent in May after having risen by 8.2 percent in April.

Germany, which recorded CPI inflation of 7.2 percent in April and 6.1 percent in May, is expecting further improvement soon.

And annual CPI inflation in Spain has been brought under control, standing at 3.2 percent in May after having been 4.1 percent in April.

Central banks in Europe have been raising interest rates for months to discourage spending, encourage saving, and lower rising prices.