Paris: The chief of France’s central bank dismissed recession risk on Wednesday, but warned that inflation would still persist in France in the coming two to three years.
Francois Villeroy de Galhau, governor of Banque de France, made the comment following the release of the country’s February Consumer Price Index.
France’s inflation should reach its peak in the first half of this year and could be halved by the end of the year, he said at a hearing before the Finance Committee of the French National Assembly in Paris.
Inflation remains the major concern for the country, especially for the vulnerable households, said Villeroy de Galhau.
Core inflation — which excludes energy and food — is still rising and amounts to 4.5 percent according to the estimates by Banque de France, he said.
“The nature of inflation has indeed changed beyond the initial energy crisis: it is not only higher but also more widespread, not just imported but also domestic, not just linked to a transitory supply shock but also potentially persistent,” warned Villeroy de Galhau.
He reaffirmed the French government’s commitment to bring inflation down to 2 percent by the end of 2024-25, and insisted this would not lead to a recession, “given the resilience of economic activity and employment.”
“In France, growth is expected to be slightly positive in 2023, a slightly higher than the 0.3 percent forecast in December, before picking up again in 2024,” he said.
France’s GDP slowed down again in volume terms in the fourth quarter of last year, according to provisional data published by the French National Institute of Statistics and Economic Studies (INSEE) on Tuesday.
The INSEE also estimated a 6.2 percent inflation surge in February, compared to 6 percent in January.
