Lower French inflation reduces pressure on the ECB for further rate increases at their next meeting on 2nd February. This is in general positive for issuers – both directly through borrowing costs and through reducing the risk of impacts that higher rates have on the economy (and so credit risk premia).

French inflation fell to 6.7% in December, from 7.1% in November.

This fall was largely driven by energy price inflation – 15.1% in December against 18.4% in November – as unusually warm weather reduced gas prices.

Services inflation fell slightly from 3% to 2.9%.