Bloomberg News

French Inflation Rate Declines for Second Month as Economy Slows

March 13, 2012

France’s inflation rate fell for a second month in February as a slowing economy outweighed the impact of higher energy prices.

Consumer prices rose 2.5 percent from a year earlier based on European Union methodology, compared with a 2.6 percent increase in January and a 2.7 percent gain in November, Paris- based national statistics office Insee said today. Economists had forecast a rate of 2.6 percent, the median of 18 estimates in a Bloomberg News survey showed. Prices rose 0.5 percent in the month after declining 0.4 percent in January.

With London crude-oil prices up 16 percent this year and the French government seeking more revenue through sales-tax increases, prices may keep rising in euro area’s second-largest economy. The European Central Bank raised its average 2012 inflation forecast for the region last week to 2.4 percent from 2 percent in December even as it reduced its growth outlook.

“We see upward risks coming from higher-than-expected oil prices,” ECB President Mario Draghi said last week. “Owing to rises in energy prices and indirect taxes, inflation rates are now likely to stay above 2 percent in 2012, with upside risks prevailing,” he added.

French consumer price increases of 2.7 percent in both November and December were the highest since Oct. 2008.

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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