Blog post

Deflation in France, hidden behind tax hikes?

The significant divergence between the core inflation measures for France reported respectively by Eurostat and the national statistical office (

Publishing date: 22 December 2014
Authors: Grégory Claeys Pia Hüttl

The release last week of the French inflation data for November revealed that core inflation had dropped into negative territory (at -0.2% year-on-year) for the first time since the French national statistical office (INSEE) started collecting this data in 1990. It also illustrates a clear downward trend of inflation since the beginning of 2012 (see dashed black line on the chart below). On the contrary, a look at Eurostat numbers shows a less worrying picture with core inflation still at a positive 0.7% yoy and a less clear trend, at least since 2013 (blue line).

Source: INSEE and Eurostat

This significant divergence between the two core inflation measures is due to the use of different definitions by the French statistical office and Eurostat. While the latter defines core inflation simply as the overall inflation index excluding energy and unprocessed food, the INSEE defines core inflation as inflation excluding public sector prices, the most volatile consumer prices and tax measures.

The different behaviour of the Eurostat ‘core’ compared to the French ‘core’ inflation can be explained mainly by changes in taxes. Indeed, the Eurostat constant tax core inflation [1] (orange line) tracks quite closely the core inflation provided by the French statistical office.

Actually, France experienced a significant tax hike in January 2014, when the standard and reduced VAT rates increased from 19.6% and 7% to 20% and 10%, respectively. The chart above illustrates clearly that the last tax hike blurred the picture concerning the underlying trend of inflation in France and that the situation may be even more worrying than the one visible in the headline and core inflation measures usually reported by the media.

[1] Inflation at constant tax excludes the potential impact of consumption tax (value added and other duties) increases on prices by assuming a full pass through of these taxes to consumer prices.

About the authors

Grégory Claeys

Grégory Claeys, a French and Spanish citizen, joined Bruegel as a research fellow in February 2014, before being appointed senior fellow in April 2020.

Grégory Claeys is currently on leave for public service, serving as Director of the Economics Department of France Stratégie, the think tank and policy planning institution of the French government, since November 2023.

Grégory’s research interests include international macroeconomics and finance, central banking and European governance. From 2006 to 2009 Grégory worked as a macroeconomist in the Economic Research Department of the French bank Crédit Agricole. Prior to joining Bruegel he also conducted research in several capacities, including as a visiting researcher in the Financial Research Department of the Central Bank of Chile in Santiago, and in the Economic Department of the French Embassy in Chicago. Grégory is also an Associate Professor at the Conservatoire National des Arts et Métiers in Paris where he is teaching macroeconomics in the Master of Finance. He previously taught undergraduate macroeconomics at Sciences Po in Paris.

He holds a PhD in Economics from the European University Institute (Florence), an MSc in economics from Paris X University and an MSc in management from HEC (Paris).

Grégory is fluent in English, French and Spanish.
Pia Hüttl

Pia Hüttl is an Austrian citizen and joined Bruegel as an Affiliate Fellow in 2015. Her research interests include macroeconomics, financial economics and monetary policy as well as European political economy.

Prior to this, Pia worked as Research Assistant for Bruegel, and as a Trainee in the Monetary Policy Division of the European Central Bank. Also, she worked as a Blue Book Stagiaire in the Monetary policy, Exchange rate policy of the euro area, ERM II and Euro adoption Unit in DG Ecfin of the European Commission.

She holds a Bachelor's degree in European Economics and a Master's degree in International Economics from the University of Rome Tor Vergata. She also obtained a Master's degree in European Political Economy from the London School of Economics, with a thesis on Current Account imbalances in the Euro area and the role of financial integration.

Pia is currently pursuing a PhD in Economics at the Humboldt University in Berlin.

She is fluent in German, Italian and English, and has good notions of French.

Declaration of interests 2015

Declaration of interests 2016

Declaration of interests 2017