France’s inflation headache deepens as prices rise at fastest pace in over two years- – Firstpost

The world’s inflation battle is entering a difficult new phase. After nearly two years of cooling prices and hopes that central banks had finally defeated the post-pandemic inflation surge, fresh data from major economies is raising concerns that price pressures are returning.

France became the latest economy to flash a warning signal after consumer prices rose 2.8 per cent year-on-year in May, the fastest pace since February 2024, according to the country’s statistics agency INSEE.

The EU-harmonised inflation rate in the eurozone’s second-largest economy accelerated from 2.5 per cent in April, confirming earlier estimates and highlighting the challenge facing policymakers.

The rise comes as inflation concerns are resurfacing across advanced economies. In the United States, price pressures have also shown signs of persistence, with inflation remaining elevated amid higher energy prices, strong consumer demand, rising input costs and uncertainty linked to tariffs.

A major factor behind the renewed inflation fears is the changing global trade environment. Higher tariffs and trade barriers have increased concerns that companies could pass rising import costs on to consumers. Supply chain adjustments, geopolitical tensions and volatile commodity markets have further complicated the inflation outlook.

Energy remains another key risk. Crude oil markets have been exposed to repeated geopolitical shocks, including tensions around major supply routes, keeping investors alert to the possibility of another spike in fuel prices. Higher energy costs often spread across the economy by raising transport, manufacturing and food production expenses.

Food inflation has also remained a concern in several regions as extreme weather events disrupt agricultural production and increase pressure on supply chains.

For central banks, the return of inflation risks creates a policy dilemma. After aggressive interest rate hikes to control the previous inflation surge, policymakers had been preparing for easier monetary conditions. But sticky inflation could force them to delay rate cuts or keep borrowing costs higher for longer.

The European Central Bank and the US Federal Reserve now face the challenge of supporting economic growth without allowing inflation expectations to rise again.

While inflation remains far below the extreme levels witnessed after the pandemic and the Russia-Ukraine war shock, the latest numbers suggest that the final stage of bringing price growth back to target may prove the hardest. For households and businesses, the message is clear: the era of inflation anxiety may not be over yet.