French Inflation Steady at 0.7%

France’s annual inflation rate was recorded at 0.7 percent in May of 2014, the same rate recorded in April. Consumer prices were broadly unchanged despite a seasonal increase in food prices and in some services linked with holidays before the summer season. The other index components decreased slightly in May, especially energy prices and those of manufactured products.

Year-on-year, food prices fell 0.9 percent, mainly due to a 7.6 percent drop in cost of fresh food. Prices of medical products decreased 2.6 percent and cost of petroleum products declined 1.5 percent. In contrast, tobacco prices rose 6.9 percent in May; actual rentals and services for dwellings went up 1.5 percent and cost of communication and transport services rose 1.5 percent. Energy prices increased 1.1 percent. 

On a monthly basis, prices were flat. Food cost rose 0.3 percent in May mainly due to the seasonal rebound of the unprocessed food prices (+2.9 percent), especially those of fresh fruits (+6.0 percent). Cost of services was broadly unchanged. However, this relative inertia hid contrasting developments according to different items of consumption. On one hand, as every year in May, prices of services dedicated to housing fell (-0.6 percent) while prices of some services dedicated to tourism increased before the summer season (+0.5 percent). Prices of manufactured goods were down again in May (-0.1 percent) and energy cost also fell 0.1 percent. 

In May, core inflation remained unchanged from April and was up 0.3 percent compared with the same month one year ago (down from +0.5 percent in April). The harmonized index of consumer prices was stable in May and rose by 0.8 percent year-on-year (as in April 2014).

French Inflation Steady at 0.7%

INSEE | Joana Taborda |
6/12/2014 9:38:01 AM