French official 12-month inflation is 0.5-pct negative

17th July 2009, Comments 0 comments

French consumer prices over 12 months fell by 0.5 percent in June, official data showed on Thursday.

Paris -- French consumer prices over 12 months fell by 0.5 percent in June, official data showed on Thursday, marking a deflationary step for the second month running but showing a monthly rise of 0.1 percent.

In May, prices over 12 months had shown a fall, of 0.3 percent, for the first time since 1957, owing mainly to a fall in the price of oil from a high point in the middle of 2008.

An extended period of falling prices amounts to deflation, a serious threat to an economy since it can set in hand a vicious spiral of falling demand, falling investment and employment, and a further fall in prices.

Underlying inflation, excluding public sector prices and volatile prices for energy and basic agricultural supplies, was steady at 1.5 percent over 12 months from 1.6 percent in May, the national statistics institute which published the data, said.

But energy prices rose by 3.2 percent in June from the levels in May. However, prices of fresh food products fell by 3.8 percent.

The retail sales period began during the month and this explained a fall of 0.2 percent in prices for manufactured goods, notably for clothing and for shoes which fell by 0.8 percent.

Food prices, excluding prices for fresh products, fell by 0.1 percent in June.

AFP / Expatica

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