In a new blog post, the Bank of France estimates that a EUR 10 increase in the price of a barrel of oil would raise consumer prices by 0.3% to 0.4% in France and 0.4% to 0.5% in the euro area. The corresponding estimates for 2016 are 0.6% and 0.7%, respectively. The decline reflects weaker direct pass-through to household fuel costs and smaller indirect effects through businesses’ production costs. The direct effect has fallen from about 0.4 percentage point in 2016 to 0.25 percentage point in France and just over 0.2 percentage point in the euro area. French consumption of petrol, diesel and domestic heating oil declined from 57.8 billion liters in 2016 to 51.7 billion liters in 2025, while fuel’s weight in the euro area consumer price basket fell from 4.8% to 4.1%. The indirect effect has also decreased as goods and services consumed by households have become less oil intensive. Oil imports per billion euros of consumption fell by about 39% in France and 35% in the euro area between 2016 and 2025. The estimates are broad accounting benchmarks and do not measure the speed of transmission or second-round effects through wages.
Bank of France estimates consumer price impact of a EUR 10 oil price rise has almost halved since 2016
The Bank of France estimates that a EUR 10 rise in the price of a barrel of oil would increase consumer prices by 0.3% to 0.4% in France and 0.4% to 0.5% in the euro area, almost half the estimated 2016 impact. Lower household petroleum consumption and reduced oil intensity across production have weakened both direct and indirect pass-through.