Figures from statistics body, INSEE, show that France experienced deflation in July, a worry for the government as this can put a sharp break on tax revenues.
Although hard pressed consumers may welcome price falls, it is believed that it can lead to people putting off purchases expecting future price falls, which ultimately puts pressure on manufacturers to cut prices and so leads to a vicious circle of decline.
INSEE has said that the price cuts were mainly due to the regulated summer sales season as well as food prices falling due to abundant seasonal supply.
Recently the French prime minister, Manuel Valls, said there was a 'real' risk of deflation and that European policies had to be brought in to boost the EU economy.
Elsewhere in Europe, Spain’s consumer prices index fell by 0.3% year-on-year in July, the biggest drop in almost five years. Month-on-month they slipped by 0.9%.