The latest report on French industrial producer prices in January 2025 showed that prices in the home market increased by 0.7 percent, reflecting both acceleration and stabilisation across sectors. Notably, refined petroleum product prices surged by 9.2 percent, driven by rising global oil prices and the euro's depreciation. This contrasts with the broader trend of declining producer prices, marking the fourteenth consecutive month of annual decline (minus 2.1 percent).

Food and beverage prices saw a notable uptick (0.8 percent), particularly in bakery and dairy products, suggesting potential inflationary pressures in consumer goods. Similarly, other industrial products saw an upward shift (0.6 percent), spurred by a sharp rise in chemical product prices (4.2 percent). Transport equipment (0.6 percent) and electronic machinery (0.7 percent) also grew.

In contrast, energy and mining prices stabilised (minus 0.1 percent), with electricity costs falling by 1.0 percent, counterbalanced by higher waste treatment fees. Import prices for industrial goods surged (1.1 percent), reflecting rising costs across petroleum (6.4 percent), food (1.4 percent), and processed meat (3.5 percent).

Overall, while short-term price increases suggest renewed cost pressures, long-term deflationary trends in producer prices indicate ongoing market adjustments and economic rebalancing. The RPI is at minus 14, and the RPI-P is at minus 10, meaning that economic activities remain behind market expectations of the French economy.

The producer price indices (PPI) measure transaction prices, exclusive of VAT, for goods from industrial activities sold on the French market. Construction is excluded. Changes in the index provide a guide to inflation from the point of view of the product's producer/manufacturer and, in contrast to the consumer price index (CPI), excludes VAT and other deductible taxed associated with turnover.

The PPI measures prices at the producer level before they are passed along to consumers. Since the producer price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer level gets passed through to the consumer price index (CPI).

Because the index of producer prices measures price changes at an early stage in the economic process, it can serve as an indicator of future inflation trends. The producer price index and its sub-indexes are often used in business contracts for the adjustment of recurring payments. They also are used to deflate other values of economic statistics like the production index. It should be noted that the PPI excludes construction.

The PPI provides a key measure of inflation alongside the consumer price indexes and GDP deflators. The output price indexes measure change in manufacturer' goods prices produced and often are referred to as factory gate prices. Input prices are not limited to just those materials used in the final product, but also include what is required by the company in its normal day-to-day operations.

The PPI is considered a precursor of both consumer price inflation and profits. If the prices paid to manufacturers increase, businesses are faced with either charging higher prices or they taking a cut in profits. The ability to pass along price increases depends on the strength and competitiveness of the marketplace.

The bond market rallies when the PPI decreases or posts only small increases, but bond prices fall when the PPI posts larger-than-expected gains. The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.