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Economy in Brief

France HICP Slowing but Unruly and over the ECB Ceiling Pace of 2% Over Shorter Horizons
by Robert Brusca September 13, 2007

France’s HICP is below 2% Y/Y at a 1.3% pace. It has since, in shorter periods of six months and three months, shown some upward pressure. The HICP core for August is not yet available, but it too has showed some pressure in recent months. France’s own core CPI is an example as it is up by 0.4% in August. It is up by 1.5% Y/Y. Still, over three and six months, its pace is in the 2.2% to 2.3% range. That is not horrible but it is above the ECB ceiling rate of 2%.

The red figures in the table below identify categories where inflation has accelerated relative to the previous period. (three months compared to six months; six months compared to year over year etc). They show that over six months inflation has heated up. And even with that, compared to six month ago three-month trends are somewhat mixed but still elevated themselves, on balance.

Inflation over twelve months is lower than it was over the previous 12 months. The diffusion readings at the table bottom underscore what the headlines for inflation tell us on that score. The diffusion reading scans the 12 main CPI categories for trends; it finds inflation sharply higher over six months compared to 12 months in most CPI categories. It also finds it only slightly more elevated over three months than over six months. Diffusion readings above 50% indicate acceleration; below 50%, deceleration. Diffusion measures the breadth of inflation, not its intensity.

Prices for alcohol and food are strong as well for restaurants and hotels. The ECB already is wary of food prices. France does seem to be experiencing some really strong pressure in inflation, though nothing terribly virulent.

France HICP and CPI Details
  Mo/Mo % Saar % Yr/Yr
  Aug-07 Jul-07 Jun-07 3-Mo 6-Mo 12-Mo Yr Ago
HICP Total 0.3% 0.0% 0.2% 2.3% 2.7% 1.3% 2.1%
Core #N/A 0.0% 0.1% #N/A #N/A #N/A 1.4%
CPI
All 0.3% 0.1% 0.2% 2.3% 2.5% 1.2% 1.9%
CPI excl Food & Energy 0.4% 0.1% 0.1% 2.3% 2.2% 1.5% 1.4%
Food 0.7% -0.2% 0.5% 4.4% 3.2% 1.2% 2.4%
Alcohol 2.9% 0.3% 0.4% 15.4% 9.5% 3.3% 0.2%
Clothing & Shoes 0.3% -0.7% 0.2% -1.0% 4.1% 0.7% -0.1%
Rent & Utilities 0.1% 0.2% 0.5% 3.0% 2.8% 2.3% 4.7%
Health Care 0.1% 0.4% 0.0% 1.9% 0.4% 0.2% 0.2%
Transport -0.4% 0.2% 0.4% 0.6% 4.3% 1.0% 3.5%
Communication 0.5% 0.0% -0.1% 1.6% -1.5% 0.9% -7.0%
Recreation & Culture -0.1% -0.2% 0.1% -1.0% -0.5% -1.9% -0.5%
Education 0.1% 0.2% 0.2% 2.4% 2.5% 2.3% 2.8%
Restaurant & Hotel 0.8% 0.5% 0.3% 6.8% 4.8% 3.0% 2.4%
Other 0.1% 0.0% 0.1% 0.7% 1.8% 2.0% 3.0%
Diffusion -- -- -- 54.5% 81.8% 36.4% --
Type: Diffusion: Compared to 6-mo 12-mo Yr-Ago --
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