Investing.com — French luxury and banking stocks rallied on Friday after official data confirmed that last month’s inflation in the country accelerated to its highest level in more than two years.
Shares in , and rose between 2.5% and 4%, while French lenders , Société Générale and Crédit Agricole gained between 1.4% and 3.6%.
Both sectors tend to benefit from rising price pressures. Higher inflation typically lifts expectations for sustained elevated interest rates, boosting banks’ lending margins and overall profitability.
Luxury groups, meanwhile, have long demonstrated an ability to raise prices without denting demand among wealthy consumers, giving them a natural hedge against inflationary environments.
French statistics office INSEE confirmed that consumer prices climbed 2.8% year-on-year in May, the steepest rise since February 2024, in line with a preliminary estimate published last month.
The EU-harmonised measure also continued its upward trend, following a 2.5% increase in April. Core inflation, which strips out volatile items, came in at 1.5% annually in May, up from 1.2% the prior month.
On a monthly basis, prices edged up 0.1%, a sharp slowdown from April’s 1% increase. Energy prices rose 0.6% over the month, driven largely by a surge in gas costs of 10.3%, though that was partially offset by a decline in petroleum product prices, INSEE said.
Food prices also ticked higher, with fresh produce leading the increase.