The French national statistics agency attributed this increase to “the acceleration of prices of services in relation to the summer period, of food and – to a lesser extent – of industrial products”. On an annual basis, food prices jumped 6.7% compared to 5.8% a month earlier. Manufactured goods prices rose 2.7% year-on-year from 2.5% previously, while prices for services jumped from 3.3% to 3.9% year-on-year. However, in a positive sign, the price of energy fell “sharply” in July – now just 28.7 percent higher than last year compared to 33.1 percent in June. This drop has been attributed to “petroleum prices”, which have been gradually falling in France throughout this month. Despite this, experts have warned that general daily prices will likely continue to rise, at least for the next two months. INSEE said in its most recent economic report from the end of June that prices are expected to continue rising to “just under seven percent in September” on an annual basis. Inflation is then expected to stabilize, easing slightly to 5.5 percent this year compared to just 1.6 percent in 2021, experts said. READ MORE: Ukraine LIVE: Putin ‘desperate’ However, inflation in France still remains much lower than some of its neighboring European Union countries, according to the latest Eurostat figures. Belgium has seen inflation rise to 10.5% year-on-year, with 10% in Spain, 8.7% in Austria, 8.5% in Italy and 8.2% in Germany. There is also now particular concern for Germany – home to the EU’s biggest economy – which is bracing for a chronic gas shortage heading into the winter months amid fears that Russia will completely cut off supplies via the Nord Stream 1 pipeline. Overall, the Eurozone economy grew much faster than expected in the second quarter of this year, but economists continued to warn of the possibility of a mild recession caused by ever-higher inflation and supply chain problems in the second half of this year. Eurozone GDP rose 0.7% quarter-on-quarter in the April-June period, up 4.0% year-on-year – beating expectations for a 0.2% quarter-on-quarter increase and a 3.4% annual rise. Inflation in the 19 countries that share the euro jumped to 8.9% in July from 8.6% a month earlier. ING economist Bert Colijn warned Europeans to expect a “mild recession starting in the second half of the year”. He said: “The acceleration in economic growth is mainly due to the effects of reopening and masks underlying weakness due to high inflation and manufacturing problems. “Going forward, we expect GDP to continue a downward trend as reopening services moderate, global demand softens and purchasing power squeezes persist. “We expect this to lead to a mild recession starting in the second half of the year.” Additional reporting by Maria Ortega.
