French inflation to accelerate, weigh on GDP: official data

French inflation will accelerate further this year, weakening purchasing power and weighing on growth in the eurozone’s second biggest economy, the official statistics agency said Friday.

Russia’s invasion of Ukraine has set off price spirals for goods and services around the world, an economic shock that shows no sign of easing anytime soon.

Consumer prices in France are expected to rise to 6.8 percent year-on-year by September and remain near that level for the rest of the year, France’s INSEE statistics agency said.

The economy is expected to growth by 2.3 percent.

Higher prices for energy, food and services in particular had already sent French inflation to 5.9 percent in June, and if the rate for the year hits INSEE’s estimate of 5.5 percent it would be the highest annual surge since 1985.

It is a situation millions of younger French have never experienced, meaning consumer confidence could be “particularly weakened,” INSEE’s forecasting chief Julien Pouget said at a press conference.

Growth would fall sharply from the seven percent chalked up last year, and the Bank of France warned this week that if current trends continue GDP growth could slump further to 1.2 percent next year.

The government has already taken or promised measures to soften the blow for households, capping electricity and fuel costs in particular, but INSEE still expects consumer spending power to contract 1 percent this year, its biggest decline since 2013.