France: Inflation falls to five-year low in December
January 14, 2015
In December, consumer prices rose 0.1% over the previous month, which contrasted the 0.2% decline observed in November and overshot the flat reading the markets had expected. According to the National Statistics Institute (INSEE), the monthly increase was due to higher prices for transport, services as well as clothing and footwear as a result of the holiday season.
Despite the monthly increase, annual inflation fell from 0.3% in November to 0.1% in December. Inflation now sits at the lowest level in five years. Core consumer prices, which do not take into account more volatile categories such as oil and fresh food prices, also rose 0.1% in December over the previous month. In annual terms, core consumer prices fell 0.1% in December, which came in just above the 0.2% drop observed in November.
Meanwhile, annual HICP inflation (based on the harmonized index of consumer prices) dropped from 0.4% in November. To 0.1% in December, also the lowest level in five years. Consequently, HICP inflation ended 2014 at an average rate of 0.6%, which was down from the 1.0% registered in 2013.
Author: Ricardo Aceves, Senior Economist