Livret A at 1.7%: The rate hike still doesn't protect against inflation
The interest rate on the Livret A savings account will rise from 1.5% to 1.7% on August 1, marking the first increase after several months of declines. With inflation at 2.8% in the eurozone, however, the French people’s favorite investment continues to erode the purchasing power of its 57 million account holders.
It’s been official for a few days now: as of August 1, the interest rate on the Livret A savings account will rise from 1.5% to 1.7%. This welcome increase—coming after several months of declines—affects some 57 million account holders, according to a press release issued by the fintech company Mon Petit Placement on July 28. In an economic climate that remains uncertain, where the French overwhelmingly favor risk-free investments, this renewed appeal could encourage many of them to boost their savings. But before getting too excited, it’s best to do the math.
In practical terms, a savings account filled to the maximum limit of 22,950 euros will earn approximately 390 euros in interest over a year, compared to 344 euros at the current rate. That’s 46 euros more, exempt from both income tax and social security contributions. For every 1,000 euros invested, the annual return increases from 15 to 17 euros. That’s nice, but it’s not enough to change your life.
Why is the rate going up? Because it isn’t pulled out of thin air. Twice a year, on February 1 and August 1, the Banque de France recalculates it using a formula that averages the inflation rate (excluding tobacco) over the past six months and the short-term interest rates in the eurozone—the rates at which banks lend money to each other on a day-to-day basis. When prices rise faster, the savings account rate follows—with a slight delay. It is this catch-up effect that is at play today.
A return that still lags behind inflation
The problem is that the numbers don’t add up. “While the Livret A now offers a return of 1.7%, it still lags behind inflation, which stood at 2.8% in June 2026 in the eurozone,” notes Mon Petit Placement. The consequence is inevitable: savings held exclusively in an account that yields less than the rate of price increases lose purchasing power over time. The principal is guaranteed, and the number of euros in the account increases, but the purchasing power of those euros decreases. At constant interest rates and inflation, the gap exceeds one percentage point per year.
Does that mean you should cash out your Livret A? No. Accessible at any time, guaranteed by the government, and fully liquid, it remains the go-to tool for emergency savings—the kind used to cover a car breakdown or a budget shortfall. Its limitations lie elsewhere: financing a five- or ten-year project, planning for retirement, or growing your wealth over the long term. Over these long time horizons, its return cannot compete with the potential of investments in the financial markets.
The Trap of an Overfilled Savings Account
Yet many savers go far beyond the point of mere caution. According to Mon Petit Placement, many of them continue to accumulate sums in their regulated savings accounts that far exceed their safety needs, because they don’t dare take the plunge into other investments. The strategy advocated by the fintech company—founded in 2017 to make investing more accessible to individuals—consists of two steps: keeping a reserve available in secure accounts, then gradually investing the surplus in long-term solutions with higher potential returns. “This increase is good news for French people who want to safeguard their emergency savings. However, it would be a shame if it led people to neglect other investment options,” warns Thomas Perret, founder of the Lyon-based company. He adds: “The real question isn’t whether to choose between the Livret A and other investments, but how to balance the two within one’s savings portfolio.”
Savings flows in the first half of the year illustrate this shift. While the Livret A savings account saw outflows of nearly 6 billion euros, life insurance posted record net inflows of 36.5 billion, according to the Cercle de l'Épargne. Households with the means have already begun shifting their cash to higher-yielding investments.
The additional 0.2 percentage points effective August 1 will therefore not significantly alter the investment landscape. They mitigate—but do not halt—the erosion of purchasing power for the 57 million savings account holders. For savings intended for specific projects or retirement, the solution still lies elsewhere: keep a safety net in the savings account, and invest the rest based on your time horizon and risk tolerance.
