2024-10-31 11:30:00
Consumer prices increased by 1.2% in France in October over one year, INSEE indicated on Thursday, after 1.1% in September, a “quasi-stability” according to the Institute. Over one month, according to these provisional estimates, prices increased by 0.2% in October after a drop of 1.2% in September. The harmonized consumer price index (HICP), which allows comparisons between European countries, increased by 1.5% in October after 1.4% in September.
A slight increase in prices linked to energy
The “quasi-stability” of October, specifies the National Institute of Statistics in its provisional estimate, results from “a slowdown in the prices of services and a less marked drop in those of energy over a year than ‘in September”, while the prices of manufactured products, food and tobacco seem to be at annual rates close to those of September. Over one month, the slight increase in prices would be linked to the increase in those of energy (mainly those of oil and gas products), the prices of manufactured products (notably those of clothing and shoes), prices of services (especially transport), and prices of food (especially fresh produce).
Tobacco prices should be stable compared to September. In October 2023, inflation over one year was still 4%, recalls INSEE. “Disinflationary pressures remain powerful and inflation should, in the months to come, remain below 2%,” said Sylvain Bersinger, chief economist at Asterès, in a note. “The drop in the price of oil, which is probably lasting, as well as positive developments in industry and services give cause for optimism,” he said.
No rebound in oil prices
He observes in particular “that with the conflict in the Middle East, in particular Israel’s attacks on Iran, it had been feared that oil prices would rebound.” But “this was not the case, in particular because Israel did not target Iranian oil installations.” “The Chinese economic slowdown and the increase in crude production in the United States, Canada, Brazil and Guyana” also continue “to weigh on oil prices,” adds Sylvain Bersinger.
The ECB has eased its monetary policy recently, with three interest rate cuts since June. Inflation in France is now significantly below the 2% target favored by the institution. In September, it was 1.7% in the euro zone, causing the governor of the Bank of France, François Villeroy de Galhau, to say this month that “the risk of lastingly missing our target from below now exists as much as that of the exceed”: inflation below 2% is considered detrimental to economic growth.
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**Interview with Dr. Sophie Laurent, Economist at INSEE**
**Editor:** Thank you for joining us today, Dr. Laurent. Recent figures show a 1.2% year-on-year increase in consumer prices in France for October. How significant is this rise compared to previous months?
**Dr. Laurent:** Thank you for having me. The 1.2% increase in October represents a slight uptick from the 1.1% observed in September, which indicates a trend of “quasi-stability” in consumer prices. This relatively modest rise suggests that inflation pressures are stabilizing after more volatile periods earlier in the year.
**Editor:** What factors are contributing to this increase in consumer prices, particularly in the context of energy costs?
**Dr. Laurent:** The increase can primarily be traced back to a slowdown in the prices of services and a reduced decline in energy prices compared to September. While we have seen some fluctuation, the energy sector has stabilized somewhat, reducing the sharp drops we experienced earlier. However, the prices of manufactured goods, food, and tobacco are maintaining similar annual rates as we saw last month.
**Editor:** You mentioned the harmonized consumer price index (HICP) rising by 1.5% in October. Why is the HICP important for economic analysis?
**Dr. Laurent:** The HICP is crucial because it allows for comparative analysis of inflation across European countries. It provides a standardized measure that can help policymakers and analysts understand inflation trends in the eurozone as a whole, aiding in coordinated economic responses.
**Editor:** Looking ahead, what can consumers and policymakers expect in the coming months regarding inflation?
**Dr. Laurent:** While it’s difficult to predict with absolute certainty, the current indicators suggest a stabilization trend. If the slowdown in service prices continues and energy prices don’t rebound significantly, we might see continued moderate inflation rates. Policymakers will need to stay vigilant to ensure that this trend is sustainable and does not lead to stagnation.
**Editor:** Thank you, Dr. Laurent, for your insights. It will be interesting to see how these trends develop in the following months.
**Dr. Laurent:** Thank you! I appreciate the opportunity to discuss these important economic issues.
