French headline inflation accelerates in June on sharp rebound in services prices

French consumer price inflation accelerated in June. Sequentially, the headline rate rose to 0.2 percent, following a rise of 0.1 percent seen in the prior month. The rise was driven by a rebound in services prices, but was partially countered by a slight fall in energy prices and deceleration in food prices. The prices of manufactured products remained stable, while tobacco prices remained the same in June after a rise of 0.3 percent seen in the prior month.

On a year-on-year basis, consumer prices accelerated to 1.2 percent in June from 0.9 percent seen in May. This rise in inflation was due to a solid acceleration in services prices and, to a lesser extent, in those of food prices. On the contrary, energy prices decelerated sharply. The manufactured products’ prices fell 0.7 percent, whereas those of the tobacco prices rose 9 percent.

The core inflation rate accelerated to 0.9 percent year-on-year from May’s 0.5 percent. The HICP inflation accelerated to 0.3 percent sequentially and to 1.4 percent year-on-year.

Delving into details, services prices rose sharply in June. On a year-on-year basis, services prices rose 1.2 percent year-on-year after rising 0.6 percent in the prior month. Transport prices recovered strongly to 1.5 percent year-on-year, owing to the sharp rise in airfares. The prices of housing-related services rose 0.7 percent. The prices of “other services” rose to 1.7 percent.

Meanwhile, food prices rose sharply as well in June, rising 2.6 percent year-on-year. Those in fresh products rose stronger than in the previous month, owing to a marked acceleration in the prices of fresh vegetables. Excluding fresh products, food prices rose at the same rate as in the prior two months.

On the other hand, energy prices dropped for the third straight month. It dropped to 2.4 percent year-on-year from May’s 3.4 percent. The fall in petroleum product prices and a deceleration in gas prices were partially countered by a sharp recovery in electricity prices.

Meanwhile, manufactured product prices dropped 0.7 percent in June. The prices of clothing and footwear dropped more than in the prior month.

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