French May Inflation Rate Slows Faster than Expected


France's annual inflation rate fell to 0.9 percent in May 2019 from 1.3 percent in the prior month and below an initial estimate of 1.0 percent. It is the lowest inflation rate since August 2017, reflecting slower growth in prices for services, energy and food and a faster decrease in those of manufactured products.

Prices slowed mostly for services (0.6 percent vs 1.0 percent in April), driven by transport services (-1.5 percent vs 0.5 percent), in the wake of airfares (−2.5 percent vs 3.3 percent); communication (-3.4 percent vs -3 percent); health (-0.4 percent vs 0.1 percent), following the implementation of the dental convention; housing-related services (-0.2 percent vs -0.1 percent) and other services (1.5 percent vs 1.8 percent). Energy cost rose 3.4 percent, below 4.8 percent in April, led by petroleum products (3.4 percent vs 5.7 percent) and gas (12.2 percent vs 13 percent). Also, inflation softened for food (2.3 percent vs 2.5 percent), namely fresh food (2.3 percent vs 3.7 percent), amid a downturn in the prices of fresh fruits (-2.8 percent vs 0.5 percent) and a slower growth in those of fresh vegetables (2.5 percent vs 3.3 percent).

At the same time, cost fell at a quicker pace for manufactured products (-0.7 percent vs -0.5 percent), mostly due to clothing & footwear (-0.7 percent vs -0.2 percent) and health products (-2.8 percent vs -2.5 percent). The prices of other manufactured products barely dropped, as in April and March (−0.1 percent). In contrast, cost continued to advance for tobacco products (9.1 percent vs 8.1 percent).

Annual core inflation, which excludes public sector prices, the most volatile consumer prices and the tax measures, eased to 0.5 percent in May 2019 from 0.7 percent in April.

On a monthly basis, consumer prices went up 0.1 percent, after a 0.3 percent increase in the previous month and slightly below an earlier figure of 0.2 percent. This slowdown came from a downturn in services prices (−0.2 percent vs 0.5 percent). Contrariwise, food prices accelerated sharply (0.7 percent after 0.1 percent). Those of manufactured product (0.2 percent vs 0.1 percent) and tobacco (0.3 percent vs 0.1 percent) increased more than in the previous month. Meantime, energy prices rose at the same pace as in April (0.6 percent).

The harmonized index of consumer prices increased by 1.1 percent from the previous year (vs 1.5 percent in April) and went up by 0.1 percent month-over-month (vs 0.4 percent in April).


French May Inflation Rate Slows Faster than Expected


INSEE | Luisa Carvalho | luisa.carvalho@tradingeconomics.com
6/14/2019 8:20:31 AM