France Inflation


Inflation slows in February

Consumer prices rose 0.5% in February over the previous month, which contrasted the 0.2% drop recorded in January. However, annual inflation inched down from January's 1.8% to 1.7%, just in line with market expectations. According to the National Statistical Institute (INSEE), the February deceleration reflected lower prices for clothing and health care, which offset higher energy and food costs. The core inflation index, which excludes more volatile categories such as oil as well as fruit and vegetables, rose 0.1% in February, contrasting the 0.1% drop in January. Despite the monthly increase, annual core inflation dropped from January's 0.7% to 0.3%. Finally, annual average HICP inflation (based on the harmonized index of consumer prices) remained unchanged at January's 1.8%. On 29 March, Finance Minister Christine Lagarde stated that a government-commissioned panel of independent economic advisors is forecasting inflation of 1.8% in 2011. Previously, the government had expected inflation to reach 1.5% this year.


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