France: Inflation stable in June

In June, consumer prices fell 0.1% over the previous month, contrasting May’s 0.2% increase. The reading undershot market expectations of a flat reading and marked the first decrease in five months. According to the national statistical institute (INSEE), the result came on the back of decreases, which were partially seasonal, in prices of clothing and footwear. In addition, petroleum products also contributed to the decrease in consumer prices.

Inflation tallied 0.3% in June, which mirrored May’s reading. Core consumer prices, which do not take into account volatile categories such as fresh food and energy prices nor regulated prices, recorded flat growth over the previous month, which was below May’s 0.2% increase. Core inflation in June remained at May’s 0.6%.

Harmonized consumer prices (based on the harmonized index of consumer prices, HICP) fell 0.1% over the previous month, which contrasted May’s 0.2% increase. On an annual basis, harmonized consumer prices rose 0.3% in June (May: +0.4% year-on-year). Annual average HICP inflation remained stable in June at May’s 0.2%.

The government expects inflation to average 0.9% in 2015. FocusEconomics Consensus Forecast panelists expect HICP inflation to average 0.2% in 2015, which is unchanged from last month’s forecast. For 2016, panelists project that inflation will accelerate to 1.1%.