Return to January 2024. INSEE confirmed this Thursday inflation of 3.1% over one year in September, compared to 2.4% in August, a tenth more than its provisional estimate. France had not experienced this for more than two and a half years, and the cause can be summed up in one word: energy.
For holders of a Livret A earning 1.7%, the addition is simple. Each year spent at the current rate costs 1.4 points of purchasing power, at a time when the government is still looking for 54 billion for its 2027 budget.
Key Points
Prices rose 3.1% year-on-year in September, the highest level since January 2024.
Energy climbed 21.3% over one year, after 16.7% in August and 12.6% in July.
Excluding energy and food, underlying inflation remains at 1.5%.
The Livret A at 1.7% shows a real yield of -1.4 points, but its formula should bring it up to February 1, 2027.
Inflation in France: 21% on energy, 1.5% on everything else
The detail published by INSEE resembles the American reading from the day before, but more brutal. Energy increased in price by 21.3% over one year, and by 3.9% in the month of September alone. Diesel reached 2.41 euros per liter on September 20, a record, and SP95 exceeded 2.17 euros. Since February, the conflict in the Middle East has disrupted tanker traffic in the Strait of Hormuz, through which nearly a third of the oil transported by sea passes. Brent remains above 106 dollars.
The rest stands. Food increased by 1.4%, services by 2.4%, and manufactured products fell by another 0.3%. Take out energy and food, core inflation stands at 1.5%. Rents, hairdressers and restaurants are not skyrocketing, unlike the pump.
France is also doing less badly than its neighbors. According to the harmonized index which is used for European comparisons, it displays 3.4% compared to 3.8% for the entire euro zone, 5% for Spain and 6.1% for Lithuania.
The Livret A, the big loser of inflation in France
At 1.7% since August 1, the Livret A now yields 1.4 points less than inflation. On an outstanding balance of 10,000 euros, this represents 140 euros of purchasing power evaporated in one year, without any line in the statement mentioning it. Bercy had increased it from 1.5% to 1.7% in August, at the suggestion of the Banque de France, based on inflation excluding tobacco of 1.5% in the first half. Two months later, the figure doubled.
But the formula already works in the other direction. The Livret A rate is the average of two figures calculated over six months: inflation excluding tobacco and the €STR, the euro zone interbank rate. However, the ECB raised its deposit rate to 2.5% on September 16, which propelled the €STR from 2.19% to 2.44% in one day. With inflation hovering around 2.5% in the second half of the year, the calculation of January 15 would give a Livret A around 2.5% on February 1, 2027, depending on what inflation does by December. The ECB meets again on October 29, and a further increase would add a few hundredths.
Fuels: Bercy will not touch taxes
Until then, the saver gets by. The government of Sébastien Lecornu has ruled out any reduction in fuel tax, with the State collecting around 60% of the price per liter. A price cap, based on the Belgian model, is being studied for early 2027. And the European carbon market (SEQE 2), pushed back to 2028, could add up to 15 cents per liter.
