FR: CPI


Thu Jul 13 01:45:00 CDT 2017

Consensus Actual Previous
Month over Month 0.0% 0.0% 0.0%
Year over Year 0.7% 0.7% 0.7%

Highlights
There were no revisions to the flash CPI data in the final report for June. Consumer prices remain unchanged on the month and 0.7 percent higher on the year, down just a tick from their final May rate.

The final HICP also matched its flash print, posting no change versus May and a 0.8 percent annual inflation rate, similarly down 0.1 percentage points from mid-quarter.

Manufactured product prices were 0.1 percent above their May level and services were up largely seasonal 0.3 percent (airfares 5.0 percent). However, food was down 0.3 percent and energy 1.1 percent (petroleum products minus 2.2 percent). Seasonally adjusted, the overall CPI was flat on the month after a 0.2 percent decline in May. At 0.4 percent, the annual underlying inflation rate was unchanged.

Inflation in France is still struggling to achieve any real traction. The annual underlying rate has not been above 0.5 percent since January and looks unlikely to accelerate significantly any time soon as domestic product markets remain highly competitive. Faster economic growth should provide some lift but the outlook for core inflation near-term would seem only broadly flat.

Definition
The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI represent the main rates of inflation. The national CPI is released alongside the HICP, Eurostat's harmonized measure of consumer prices. A flash estimate was released for the first time in January 2016 and is now published towards the end of each reference month.

Description
The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. As a member of the European Monetary Union, France's interest rates are set by the European Central Bank.

France like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). The HICP is calculated to give a comparable inflation measure for the EMU. Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies.

Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.