France’s economy roars in Q3, inflation jumps

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PARIS -France’s economy grew a faster-than-expected 3% in the third quarter, preliminary data showed on Friday, propelled by a pick-up in consumer spending and exports as the euro zone’s number two economy rebounds from the COVID-19 pandemic.

Finance Minister Bruno Le Maire told France Info radio the figure was an “exceptional result” that showed the economy was heading in the right direction.

A Reuters poll of 24 analysts had forecast a 2.1% expansion for the July-September period

The INSEE national statistics agency said the third-quarter growth meant France’s economy was close to getting back to its level before the COVID-19 pandemic hit.

Analysts at investment bank ING hailed the third-quarter figures as “excellent news” but warned they could represent a peak for the year as the global economy battles inflationary concerns and supply chain problems.

“The peak has been reached and from now on, economic growth will start to slow,” ING said.

Spiralling energy prices in October saw France’s EU-harmonised rate of inflation jump to 3.2% year-on-year (vs 2.7% the previous month) as the cost of energy leapt 20.1%, INSEE reported.

Month-on-month prices rose 0.5%, it added.

Central banks around the world have been signalling tighter policy amid rising prices, though European Central Bank President Christine Lagarde on Thursday pushed back against market bets that price pressures would trigger an interest rate hike as soon as next year.

She identified higher energy prices, a global mismatch between recovering demand and supply, and one-off base effects such as the end of a cut in German sales taxes as the three main factors temporarily driving euro zone inflation.

INSEE has forecast the French economy to grow 6.25% for 2021.

(Reporting by Sudip Kar-Gupta; Editing by Clarence Fernandez and Angus MacSwan)