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Economy in Brief

Consumer Prices Inflation Modest in France, India and South Africa
by Carol Stone February 25, 2004

Consumer prices in three disparate countries were reported today for January. Inflation in France and South Africa looks tame while that in India is at least stable at a rate that is quite moderate by historical comparison.

The first graph shows the wide swings in India's CPI for agricultural workers; similar movements are apparent in the more recent data available for other worker groups, such as "Urban Nonmanual Workers". The Indian Central Statistical Organization notes that bankers and other users of inflation data now emphasize this latter series, which we show in the table below. It covers living costs for workers in what is probably the most dynamic segment of the Indian labor market, office workers in urban areas.

France's CPI by comparison has been very steady, with an inflation rate around 2%. Most recently, tobacco prices have risen rapidly; the French national statistics office publishes the CPI excluding tobacco, which is seen in the table to have run consistently lower than the total index, lately by 0.6%. So inflation for non-smokers in France is quite modest.

The second graph shows consumer prices in South Africa. We include in the graph a basic short-term interest rate, 91-day Treasury bills. The CPI in South Africa contains mortgage interest costs, so the overall reported inflation performance is strongly related to movements in interest rates. Thus, the recent extraordinarily slow pace of inflation reflects recent interest rate declines; this impact is seen in the "housing" item in the table. Prices of other items are mixed, with current upward pressure coming from beverages and tobacco and transportation services. Overall, though, after a widespread surge in 2002, consumer prices in South Africa have moderated markedly.

Consumer Price Indexes, % Change Jan Dec Y/Y 2003 2002 2001
France - Total 0.2 0.1 2.0 2.2 2.3 1.4
  Total less Tobacco -- -- 1.4 1.6 2.1 1.3
  Clothing -- -- -2.1 0.0 0.7 1.0
South Africa -- Total -0.1 0.2 0.2 0.3 12.4 4.6
  Housing -- -- -8.5 -7.4 19.5 -2.6
  Clothing -- -- -3.6 -3.0 3.9 -3.0
India-Urban Nonmanual Workers 0.7 0.7 3.9 4.0 2.8 5.1
   Agricultural Labourers 0.9 0.6 3.8 3.4 2.9 1.4
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