French final August HICP inflation likely to have confirmed flash reading of 0.4 pct

France’s final HICP inflation for August is likely to have remained the same as the flash estimate. According to a Societe Generale research report, the HICP inflation is expected to have confirmed the flash reading of 0.4 percent year-on-year, while the national CPI measure is also expected to have confirmed the flash reading of 0.2 percent, said Societe Generale.

In spite of the seasonal effect of the end of the summer sales of manufactured goods particularly, and the higher accommodation prices in August, core inflation has not been able to recover. This probably shows the negative effect of the July terrorist attacks on tourism activity and goods consumption.

Prices of energy have also dropped in sequential terms, but due to the base effects, energy component has registered a slightly lesser annual decline. Meanwhile, prices of food continued to increase to 1.4 percent year-on-year from 1.2 percent. This is mostly because of considerably higher fresh food prices.

“We believe inflation should recover at a faster pace, climbing to 1.0 percent by the end of the year, led by base effects from energy prices”, added Societe Generale.