Bloomberg News

French Inflation Advances to Highest in Almost Three Years

September 13, 2011

(Updates with comment from analyst in third paragraph.)

Sept. 13 (Bloomberg) -- French inflation accelerated to the highest in almost three years in August as the end of summer sales boosted prices of manufactured goods and the cost of energy jumped.

The inflation rate, calculated using a harmonized European Union method, rose to 2.4 percent from 2.1 percent in July, national statistics office Insee said today in an e-mailed statement. That’s the highest since October 2008. Economists expected a 2.2 percent gain, the median of seven estimates in a Bloomberg News survey showed.

“This is more of a catching up story than a threatening drift,” said Dominique Barbet, an economist at BNP Paribas in Paris. “Aggressive seasonal sales in July are the main factor behind” the increase. Prices rose 0.6 percent in the month.

The European Central Bank has raised interest rates twice this year before saying last week that the risk of a recession outweighs the threat from inflation, giving officials the option to take further action should the euro-area debt crisis worsen.

The monthly increase in inflation in the region’s second- largest economy “comes essentially from the growth in manufactured products at the end of seasonal sales,” Insee said. “Energy prices are also higher, both because of an electricity-price increase and a slight gain in oil products.”

The price of manufactured goods climbed 1.6 percent in August from July, with shoes and clothes advancing 9.8 percent. Energy prices gained 0.4 percent in the month, while food prices fell 0.2 percent.

--Editors: Jennifer M. Freedman, Jeffrey Donovan

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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