French Inflation Rate Falls to 11-Month Low

France's annual inflation is expected to slow further to 1.2 percent in January 2019 from 1.6 percent in the previous month. That would be the lowest rate since February due to a deceleration in energy prices while services inflation should remain unchanged.

Energy inflation is set to fall to 1.9 percent in January from 8 percent in the previous month; and services prices are expected to increase 0.9 percent, the same pace as in December. In addition, manufactured products cost should continue to drop (-0.4 percent vs -0.5 percent). By contrast, food inflation is set to pick up to 2.7 percent in January from 2.5 percent in December, boosted by both fresh food (8.3 percent vs 7.8 percent) and other food products costs (1.7 percent vs 1.6 percent). Tobacco prices are likely to rise 14 percent, faster than 12.8 percent increase in December.

On a monthly basis, consumer prices are expected to fall 0.5 percent in January after being unchanged in December, and compared to market expectations of a 0.2 percent drop. The prices of manufactured products should drop sharply because of the beginning of winter sales. Those of energy should fall again, but less than in December, in the wake of petroleum product prices. Services prices should slow down due to a seasonal downturn in airfares. Food prices should also be a little less dynamic than in the previous month. Meanwhile, tobacco prices should increase after a stability in December.

The harmonised index of consumer prices is expected to rise by 1.4 percent from the previous year (vs 1.9 percent in December) and fall by 0.6 percent month-over-month (vs 0.1 percent in December).

 French Inflation Rate Falls to 11-Month Low

INSEE | Joana Ferreira |
1/31/2019 8:03:30 AM