In December 2024, inflation trends revealed subtle shifts across sectors as CPI rose modestly by 0.2 percent monthly and held steady year-on-year at 1.3 percent in line with the consensus and the provisional figures. This stability reflects offsetting movements: energy prices rebounded (1.2 percent), driven by reduced declines in petroleum products, while service inflation eased slightly (2.2 percent from 2.3 percent). Food prices stabilised, aided by a notable deceleration in fresh produce prices, particularly vegetables (minus 3.5 percent).

Core inflation dipped to 1.3 percent from 1.5 percent, signalling easing underlying pressures. However, the harmonized index of consumer prices showed a slight acceleration (1.8 percent year-over-year), reflecting persistent price growth in certain areas like transport (5.3 percent) and insurance services (9.5 percent).

Manufactured goods prices declined further (minus 0.4 percent), with sharper falls in clothing and footwear (minus 0.4 percent) and major household appliances (minus 2.5 percent). Conversely, vehicle prices (1.2 percent) and sports equipment prices stabilised, suggesting isolated demand resilience.

While easing core and food inflation may offer temporary relief, rising energy costs and sector-specific price pressures, such as transport and insurance, could maintain upward momentum, taking the RPI and RPI-P to 4 and 5 respectively. This means that economic activities, in general, are within market expectations of the French economy.

French annual CPI inflation is seen at 1.3 percent in the final reading for December, unchanged from the preliminary report and unchanged from 1.3 percent in November. CPI is expected up 0.2 percent on the month, also unrevised from the preliminary result. For the HICP, the figures are seen unrevised at 1.8 percent on the year and up 0.2 percent on the month.

The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI represent the main rates of inflation. The national CPI is released alongside the HICP, Eurostat's harmonized measure of consumer prices. A flash estimate was released for the first time in January 2016 and is now published towards the end of each reference month.

The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. As a member of the European Monetary Union, France's interest rates are set by the European Central Bank.

France like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). The HICP is calculated to give a comparable inflation measure for the EMU. Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies.

Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.