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France Inflation Climbs as Diesel Prices Hit Record Highs
Confirmed
In Short: In August, France experienced a rise in inflation, particularly driven by diesel prices, which reached a new record high, affecting the cost of goods and services.
In August, France witnessed a rise in inflation, particularly driven by diesel prices, which reached a new record high, according to reports. Diesel fuel prices hit a record high on Thursday, surpassing the previous peak set in June 2022 during Russia’s invasion of Ukraine. The new record is likely to spread through the economy and feed inflation, which could damage Republican prospects of retaining control of Congress in the upcoming midterm elections.
The rise in diesel prices is not isolated; it is part of a broader trend affecting the cost of goods and services. According to the U.S. fuel price monitoring service GasBuddy, diesel now costs an average of $5.82 a gallon, breaking the previous record high of $5.81 set under former President Joe Biden. This increase is significant as diesel is considered the backbone of the economy, driving up the cost of groceries, manufactured goods, and overall inflation.
The economic impact of these rising fuel prices is evident in the labor market and consumer sentiment. The August jobs report showed that the economy is performing better than expected, with headline inflation remaining above target at 3.4%, while core CPI rose 0.29% month-on-month. This increase is nearly double the 0.17% trend rate needed to bring annual inflation down to the 2% target. The Federal Reserve’s Chair, under pressure to clarify the Fed’s reaction function, emphasized a focus on inflation, which has been above target for five and a half years.
The environmental impact of these rising temperatures is also significant. Climate scientists have declared August 2026 as the world’s joint hottest month on record, and the hottest August in history. Western Europe experienced its warmest summer in recorded history, surpassing the previous record set in 2003. Severe drought conditions have hit the UK, France, Hungary, Romania, and Serbia, and major rivers from the Rhine and Danube to the Dnieper experienced exceptionally low flows.
What's confirmed
- AUD/USD remains on the back foot below 0.7150 in the Asian session on Tuesday, close to an over three-week low touched the previous day.
- US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair.
- Mixed Chinese activity data for August also fail to inspire the Aussie.
- Last month’s 2-1 victory for Fenerbahce in France meant the Turks progressed 3-2 on aggregate, and after the final whistle, Greenwood and Guendouzi, who both previously played for Lyon’s bitter rivals Marseille, were involved in a brawl with players and coaching staff from both sides.
What's still developing
- Gold struggles to capitalize on its modest Asian session uptick, and remains close to a one-month low, which it touched the previous day.
- Bitcoin holds steady around $78,000 on Tuesday, sustaining its roughly 2% recovery from the previous day.
- A POLITICO Poll conducted in August found that 61 percent of individuals surveyed believe the Iran war has made things more expensive for their families, up 4 percent from a month earlier.
- Our projections for jobs and inflation suggest no need for a series of hikes After sounding hawkish in June and then backtracking somewhat at the July FOMC press conference, Chair Warsh was under pressure to clarify the Federal Reserve’s reaction function under his leadership at Jackson Hole.
- Previously, it was that the Fed would hold unless the data justified a hike.
- GBP/USD rose to 1.3552 on Thursday, reaching its highest level since 29 August.
- The UK inflation backdrop is also reinforcing expectations of tighter monetary policy.
- The European Union ’s Copernicus Climate Change Service said August 2026 tied with July 2023 for the hottest calendar month in the temperature records.