Thursday, December 11, 2014

The France flirts with deflation again in November – Les Echos

The France flirts with deflation again in November – Les Echos

The consumer prices fell 0.2% in November, according to INSEE. Calculated over a year, inflation decelerated to 0.3% against 0.5% a month earlier. The inflation is negative for the first time since 1990

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The news is bad for the éconmie but good short term for consumers. In November, in fact, inflation has decelerated again, according to figures released Thursday by INSEE. If one month, the index of consumer prices shows a 0.2% decline, the annual inflation now at 0.3%, down from the 0.5% posted in October.

The recovery of October appears as a kind of hiccup in the slow slide of the rate of inflation for several months. At 0.3% the infation indeed finds its level of September. But even if for now the Hexagon is not deflation but low inflation, these figures are likely to heighten fears a little. And shortly after that the ECB itself lowered its inflation forecast for the coming years.

And especially since the INSEE own admission, the underlying inflation indicator fell by 0.1% compared to October and 0.2% compared to November 2013. “This is the first time that core inflation -jacente is negative since the series is (1990), “said INSEE.

So, Natixis, Marie-Pierre Rippert now believes that France could be inflation” zero “in December and French inflation could be in the red at the beginning of the year. Yoy prices could well show a decline of 0.1 to 0.2% in February. But on average over the year inflation would remain positive with an increase of 0.3%.



Energy and rebates in question

In the month of November, several factors explain the decline in prices. Starting with oil prices continue to decline. They show indeed a decrease of 2.7% in November, after a 1.7% decline in October and 0.3% in September. In one year, they fell by 5.1% year on year).

At this decline in energy prices, in addition the effect of the many promotions that hit manufactured goods. The prices of these indeed fall 0.3% on month and 1.2% year on year. -2.7% After -1.7% in October and 0.3% in September; -5.1% Yoy)

The largest price reductions affect new cars (-. 2.5% in November and 0.1% year on year) and audio-visual equipment, photographic and information (-0.8% on a month – 7.3% over a year) .S’y add seasonal declines for appliances and toys

Seasonal decline in tourism

Finally, services prices fell back slightly (-0.1% as in November 2013; + 1.5% over a year) mainly due to the seasonal drop in prices of tourism services.

And in particular those of air passenger transport, which fell 5.5% on month but still show a 1.9% annual rate.

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