Recent economic indicators have brought positive news for two of Europe’s major economies: France with its inflation relaxing and slowing down while the struggling United Kingdom [UK] economy gets an 0.2% growth boost.
In France, the inflation rate dropped to its lowest level since February 2022, reaching 4.3% in July, compared to June’s 4.5%.
This decline was driven by a 3.7% year-on-year decrease in energy prices. Food prices, although still elevated at 12.7% higher than the previous year, showed a decrease from June’s 13.7% year-on-year figure.
In France, Tobacco prices surge by 9.8% year on year
Transport costs saw a rise of 5.4% over the past year, while communication services became 6.1% cheaper. Notably, the “rents, water and household waste collection” category experienced a 3.1% increase in the past year. Tobacco prices escalated by 9.8% year-on-year.
Core inflation, excluding state-regulated and highly volatile prices, dropped from 5.7% in June to 5.0% in July year-on-year. Despite this moderation, French inflation remains well above the European Central Bank’s target of nearly but below 2%.
Meanwhile, the UK, which had been grappling with high inflation at 7.9% in the 12 months leading up to June 2023, managed to avoid stagnation as its economy grew by 0.2% in the second quarter of the year.
This growth exceeded expectations, particularly driven by a strong manufacturing sector, with notable contributions from automotive and pharmaceutical industries.
The weather and other factors also boosted sectors such as construction, accommodation, and food services. As Finance Minister Jeremy Hunt noted, the measures taken to combat inflation are yielding results, and the Bank of England predicts the country will evade a recession.
However, despite this progress, the UK still maintains the highest inflation rate among the G7 nations.