It is a figure that surprises as much as it questions: in March 2025, France shows the lowest inflation throughout the euro zone, with only 0.9% more than a year, according to Eurostat. As a comparison, the European average is 2.2%, the drawn speaks high by countries such as Germany (2.3%) or Slovakia (3.5%). Only Denmark (1.4 %) and Luxembourg (1.5 %) address it.
Quick disinflation with a harmonized consumer price index (IPCH) that was still 2.4% of the previous year, appearing in Europe. But behind the flattering figure, is this deceleration the sign of prices control … or a lack of breath?
Highly diminished energy
The first cause of this rapid deflation: the fall in energy prices.
In March 2025, 6.6% fell for a year, according to Insee. This movement, linked to the reduction of regulated electricity prices that occurred a month before, weighed largely in the price index, the energy that represents a significant part of household consumption. Therefore, this very specific administrative measure had a direct and rapid effect on global inflation.
Another point of determination: a moderate evolution of prices in several key sectors. Manufactured products, for example, recorded a 0.2% drop during the year, after the stability observed in February. A trend explained by a fairly stable demand, but also by strong competition, which limits the possibility that companies increase their prices.
On the side of the services, prices remained almost stable with a slight increase of 2.3%. A rate that indicates that despite a slight increase, the price increase remains contained during the year. On the side of the food, the prices of more than a year increased only 0.6% in March according to Insee.
The only remarkable exception: fresh food products, whose prices begin (+5.5 % for vegetables, +3.4 % for fruit), driven by unfavorable climatic conditions and increases in production costs. But this thrust remains isolated and the general trend down is not reversed.
More competitive France
In general, France, with an inflation rate that should barely reach 1% in 2025, is largely below the objective that the European Central Bank has established to reach 2% in the euro zone.
In other words, if France today shows the lowest inflation rate in the euro zone, it is because markets such as food, for example, are more competitive than in most of our neighbors. Therefore, when the increase in food prices still reached 3% in March for a year in Germany according to Destatats, in France it was five times lower.
The deflation spectrum
But precaution is in order. The drop too fast in inflation or even prices can have harmful effects.
Consumption remains in the mast in the country with the negative consequences in orders and investments in companies.
Then a threat floats even greater than inflation that is that of deflation. This is what China has known in recent years with companies forced to sell products not sold, destroying value, beginning its profitability and generating unemployment.
However, this scenario is not really planned for France.
The economist Éric Dor alerts a more acute risk according to him: that of the commercial war launched by Donald Trump.
Because if inflation is under control, the economic environment is still unstable. As Thursday remembered Christine Lagarde, president of the ECB on Thursday: “There will be a negative impact of customs duties on economic growth.”
Source: BFM TV
