Paris (Bloomberg) -- The pace of inflation in France, already at a three-year high, will quicken in 2008 relative to last year, fueled by higher prices for oil and commodities, French Finance Minister Christine Lagarde said.

“We will without a doubt have more inflation in 2008 than in 2007,” Lagarde said in an interview with France Info, a Paris-based radio station.
The 70 percent increase in oil prices over the past year pushed France's inflation rate to the highest in more than three years in November. French consumer prices rose at an annual rate of 2.6 percent in the month, up from 2.1 percent in October, Insee, the Paris-based national statistics office, said Dec. 13. Crude-oil prices reached a record $100.09 on Jan. 3 in New York.
“There is imported inflation because of factors that are external, like the increase in the price of oil and commodities,” Lagarde said. “I doubt the price of oil will fall in 2008. The same goes for agricultural commodities. Global demand remains strong and we can't stop the Chinese and Indians from seeking more to meet their growing needs.”
Rising inflation has overshadowed tax cuts by President Nicolas Sarkozy. Consumer confidence in France unexpectedly dropped to a 19-month low in December, Insee said. The December reading was the lowest since May 2006.
France's rising prices are mirrored elsewhere in Europe. European inflation stayed at the highest in more than six years in December as food and energy costs soared, heightening concern among central-bank policy makers that rising prices will fuel bigger wage increases.
--Consumer spending
The inflation rate in the euro area was 3.1 percent, unchanged from November and the highest since May 2001, the European Union's statistics office in Luxembourg said. The rate hasn't been higher since the 1999 launch of the euro.
ECB policy makers convene in Frankfurt on Jan. 10 to decide again on interest rates. The bank aims to keep inflation just below 2 percent.
In France, higher gasoline and food costs have already had an impact on consumer spending. Retail sales fell for a third month in December and purchasing of manufactured goods, which accounts for about 15 percent of the economy, dropped 0.1 percent in November.
--Lagging behind
“We're better than the average of the European Union,” Lagarde said. “But some prices will rise this year.”
The French economy may expand 1.9 percent in 2008, lagging behind the euro region's expected 2.2 percent growth rate for a third year, according to European Commission forecasts.
Lagarde said she held meetings in November with oil producers and distributors on how they pass on higher prices.
“A decline in prices will be passed on immediately, while producers and distributors will wait for four weeks before passing on an increase,” she said, adding that the government remains “extremely vigilant.”