French Inflation Is Unrelenting

French inflation continues to be unrelenting and hot. The HICP measure of inflation rose by 0.6% in April. France’s domestic CPI measure rose by 0.6%, but its gain excluding energy is 0.5% in April. These continue to be very hot monthly readings.

France’s HICP inflation rate is high and it's accelerating. Over 12 months the pace is 6.9%, over 6 months it holds at 6.9%, and over 3 months it jumps up to an 8.4% annual rate.

France’s domestic CPI rises by 6% over 12 months, it steps up to a 6.3% pace over 6 months and runs at an annual rate of 7.9% over 3 months. The domestic CPI excluding energy gains 5.8% over 12 months, runs at a 6.1% annual rate over 6 months and jumps up to an 8.4% annual rate over 3 months. French inflation is not just high and stuck; it's high and accelerating.

France is not showing any sign of inflation progress even though the ECB continues to hike rates. And the whole of the European Monetary Union headline inflation has peaked and fallen off, but France is not following this pattern; France is now more or less the same pattern as the United Kingdom where inflation has gone up and refuses to come down. France’s ex-energy inflation rate continues to accelerate.

Inflation in April may have gotten some boost from oil prices where Brent measured in euros rose 6.4%. But that's after two months of declining oil prices. In fact, Brent oil prices are lower over three months, 6 months, and 12 months although the rate of change over those horizons is sequentially diminishing.

Besides being hot and accelerating, French inflation also remains quite broad. The diffusion calculation shows that over three months inflation is accelerating across 72.7% of the major categories compared to its pace of six-months ago. Over 6 months, it's accelerating in 63.6% of the categories compared to its pace over 12 months. Over 12 months the diffusion gauge drops below 50% indicating that inflation is not accelerating in most categories compared to the pace of 12-months previously; the 12-month diffusion metric is at 45.5% just below the neutral 50% mark

France is in the same pickle as the rest of Europe with the Russia-Ukraine war raging nearby. In addition, France is fighting off some political problems as president Macron has decided to raise the retirement age, creating political havoc across France and the most strident protests France has seen in years. This, of course, gets in the way of economic management. At the same time, Macron is trying to play some kind of role as conciliator with Russia as he is the leader in Europe that has the best relationship with Putin - for better or for worse. None of this is helping him to manage his economy.

The European Central Bank is going to continue to raise rates because the euro area continues to have excess inflation. France seems to have a more intense sort of problem and it's not clear that any policies have been directed in France to try to combat its entrenched inflation problem. France does not have the highest inflation rate in the European Monetary Union, by any means. However, inflation in the rest of the EMU shows signs of turning lower, while France shows no sign of inflation letting up and the core rate continues to accelerate. The 3-month French ex-energy and headline rates of inflation are among the leaders in the EMU.