France Inflation Holds Below 1% in August Amid ECB Rate Outlook

France's annual inflation rate continued to ease in August, with harmonized consumer prices rising by 0.8%, down from 0.9% in July, according to multiple sources including France's statistics agency and Bloomberg. This slowdown was driven largely by a reduction in services inflation, particularly in transport, and a faster decline in manufactured goods prices, although the fall in energy costs moderated and food inflation remained stable. The inflation rate has stayed below the European Central Bank's 2% target for seven consecutive months, sustaining a slim possibility of an interest rate cut at the ECB's upcoming policy meeting, though the deposit rate is expected to hold steady at 2.0%. Despite the easing inflation, monthly consumer prices rose slightly due to seasonal factors, such as a rebound in clothing prices after summer sales. The steady inflation trend offers a glimmer of hope for ECB policymakers who favor easing, but economic growth in France and Spain may slow in the second half of the year amid political and consumer challenges. Investors and ECB officials remain cautious, keeping all options open for monetary policy adjustments.