Inflation in France experienced a marked slowdown in 2025, following two years of sustained increases. The consumer price index (CPI) measured by Insee shows a limited average annual increase, far from the peaks observed in 2022 and 2023. Behind this overall figure lie contrasting sectoral dynamics, where energy and food prices are pulling down while services remain resilient.
Underlying inflation in 2025: why services do not follow the trend
The decline in overall inflation in 2025 masks a phenomenon that annual averages make less visible. The so-called underlying inflation, calculated excluding energy and fresh food products, remains higher than total inflation. This gap reflects persistent pressure on service prices.
Further reading : What are the average salaries in Morocco?
The source of this resistance lies in the wage increases negotiated in 2023 and 2024. These salary hikes, obtained in response to the inflationary shock, continue to spread into production costs in labor-intensive sectors: hospitality, accommodation, health, personal services. The effect is mechanical and delayed over time.
The data published by Insee for December 2025 confirms this reading. Year-on-year, consumer prices increase by 0.8% year-on-year, with underlying inflation slightly rising compared to previous months. Health services, in particular, show an acceleration. To delve deeper into the analysis of the inflation rate in France in 2025 according to Insee, household expenditure items deserve detailed examination.
You may also like : Everything You Need to Know About the Legality of Poppers in Spain: What the Law Says
Energy and food: the two drivers of disinflation in France
The decline in overall inflation in 2025 rests on two pillars. The first is energy. After the spikes related to the geopolitical crisis of 2022, energy prices have normalized. Insee notes a more pronounced decline in energy prices year-on-year at the end of 2025.
The second pillar is food. Food prices, which surged in 2022 and 2023, are experiencing a new slowdown in 2025. The combination of these two dynamics explains why the CPI on average drops to 0.9% in 2025, down from 2% in 2024.
Insee’s forecasts for 2025 were based on two structural assumptions:
- Relatively stable oil prices throughout the year, without a new supply shock comparable to 2022.
- The gradual end of public measures for energy price caps, without full renewal of the capping mechanisms.
- A limited transmission of wholesale electricity price decreases to regulated tariffs, due to the schedule for revising tariff grids.
These assumptions have generally been validated over the first three quarters. However, the OFCE indicates that the situation shifts at the beginning of 2026, with a shock on hydrocarbon prices linked to the war in Iran and the blockage of the Strait of Hormuz, which could contribute to increasing inflation by several tenths of a point.
Insee forecasts and Banque de France projections: diverging scenarios for 2026
Insee publishes its inflation forecasts as part of its economic notes, with a horizon of a few quarters. The Banque de France, in its macroeconomic projections from September 2025, covers a longer horizon, up to 2027. Both institutions agree on a notable decline in inflation in 2025, but their scenarios for the future differ significantly.
The Banque de France anticipates a gradual rise in inflation towards the 2% target in 2026 and 2027, driven by the normalization of energy prices and continued nominal wage increases. The OFCE, on the other hand, estimates average inflation at 1.8% in 2026, with the impact of the energy shock assessed at 0.6 points.
These discrepancies do not stem from calculation errors. They reflect different assumptions about oil prices, the pace of wage cost transmission, and the evolution of public pricing policies. The available data do not allow for a decisive conclusion between these scenarios, as each relies on inherently uncertain exogenous variables.
What the CPI really measures
The consumer price index covers a basket of goods and services representative of household consumption. Insee has updated its methodology by switching to a CPI base 2020, which modifies the weighting of certain items. Manufactured products, for example, show a slight decrease in prices in 2025, a phenomenon linked to international competition and online retail promotions.
The HICP (harmonized index of consumer prices at the European level) differs slightly from the national CPI, as it incorporates common calculation conventions for the eurozone. The two indicators converge on the trend, but their exact levels may vary by a few tenths of a point.
Household purchasing power: the gap between measured inflation and perceived inflation
The average annual inflation of 0.9% for 2025 suggests that purchasing power is significantly improving. The reality is more nuanced. Nominal wages continue to rise faster than prices, according to projections from the Banque de France. This wage recovery is real.
However, the OFCE notes that the household savings rate remains high, suggesting a persistent precautionary behavior. Households do not mechanically translate gains in purchasing power into additional consumption. Household investment, after reaching a low point, is starting to recover, but slowly.
Several factors contribute to the gap between measured inflation and perceived inflation:
- Mandatory expenditure items (rent, insurance, subscriptions) weigh more heavily in the actual budget than in the statistical basket of the CPI.
- Price decreases on technological or manufactured products mainly benefit households that frequently renew these purchases.
- Price increases for services (health, transport, dining) affect all households recurrently and visibly.
The year 2025 closes an inflationary cycle that began in 2021. The CPI returns to levels close to those observed before the health crisis. The open question now concerns 2026: the energy shock linked to the Middle East, if it persists over time, could bring French inflation around 1.8% on average annually, a level that remains moderate but would be enough to interrupt the disinflation trajectory.