Global| Sep 13 2007France HICP Slowing but Unruly and over the ECB Ceiling Pace of 2% Over Shorter Horizons
Summary
Frances 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 [...]
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.
| 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 | -- | ||
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
More Economy in Brief
