The figure, in line with forecasts by both INSEE and the Bank of France, represented a marked pick-up from 2016, when gross domestic product grew by 1.1 percent.
The economy performed particularly strongly in the fourth quarter of last year when GDP expanded by 0.6 percent, the statisticians calculated.
The government had been pencilling in growth of 1.7 percent for last year.
But Finance Minister Bruno Le Maire recently hinted that the performance could be even better, saying that "growth is solid. It may be close to 2.0 percent in 2017."
The acceleration in economic activity was driven largely by increased investment, which was up 3.7 percent last year, INSEE said.
Consumer spending increased by 1.3 percent, even if consumption growth slowed in the fourth quarter.
Exports also picked up, growing by 3.5 percent in 2017, compared with 1.9 percent a year earlier, while imports were up 4.3 percent.
That meant that France's overall net foreign trade continued to weigh on growth, knocking 0.4 percentage point off GDP, INSEE said.
Looking ahead to this year, the institute said it expected the current growth momentum to continue, with GDP projected to expand by 0.5 percent in the first quarter and 0.4 percent in the second quarter of 2018, with activity driven primarily by exports.
Unemployment is expected to come down slightly this year, with the jobless rate set to fall to 9.4 percent by mid-year compared with 9.7 percent at present.
Both the government and the Bank of France are pencilling in overall GDP growth of 1.7 percent for 2018.