France unveils €100 fuel inflation subsidy for low-, middle-income earners

"We believe that this increase in prices is temporary," Castex said in an interview on TF1 television, "but we cannot let it hobble the recovery."

The prime minister said the €100 subsidy would be paid directly to 36 million workers.

President Emmanuel Macron, six months from a presidential election, is seeking to limit damage to his economic record from spiraling energy prices.

The government had already scrambled in recent weeks to cap gas and electricity prices and to help the poor pay winter heating bills as energy prices jumped worldwide on the post-pandemic economic recovery.

In late September, Castex said that after an increase in October, household gas prices would likely remain at the same level until the spring. However, on Thursday he said the decrease in world prices would be slower than anticipated and that the cap would remain in place until the end of 2022.

As petrol prices steadily climbed in recent weeks, the government faced growing pressure to cut taxes paid at the pump, which can amount to up to 60% of what drivers pay.

Finance Minister Bruno Le Maire argued that step would be costly to public finances and would also amount to a subsidy for fossil fuels at a time when the government was trying to wean the economy off them.

Taxes on energy and gasoline can be a sensitive issue in France. They sparked waves of weekly demonstrations by protesters known as "Gilets Jaunes" due to the high-visibility yellow vests they wear.

Castex said the 100 euro payout would be automatic, and would come on private sector workers' payslips in December, while civil servants and pensioners would receive it in January or a bit later.

He added that the 2000 euro threshold would be calculated per person, not per household, and that the government would stick to its 2022 budget deficit target of 5 percent of GDP by compensating the payout with new income and budget savings.

(FRANCE 24 with REUTERS)