French inflation hit 2.6% in July, misses forecast

French inflation rose to 2.6 per cent in July, slightly above June’s 2.5 per cent but below the 2.8 per cent forecasted by economists, recent data by Insee showed on Wednesday.

The slower-than-expected increase in consumer prices presents mixed signals for the European Central Bank (ECB), which is awaiting more data to guide its monetary policy decisions.

While inflation in France saw a boost from higher energy costs, food prices eased, and core inflation in services slowed to 2.5 per cent—the lowest in over two years. Eurozone inflation data due later is expected to show a steady rate of 2.5 per cent.

This mixed inflation data comes amid stronger inflationary pressures in Germany and the Netherlands, complicating the ECB’s decision-making process.

Euro area bonds experienced small gains post-data, with German 10-year yields falling to 2.31 per cent, the lowest since March.

Attribution: Bloomberg & Insee