| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -0.1% | -0.1% to -0.1% | -0.1% | -0.1% |
| Year over Year | 0.7% | 0.7% to 0.7% | 0.7% | 0.7% |
| HICP - M/M | -0.2% | -0.2% | ||
| HICP - Y/Y | 0.6% | 0.6% |
Highlights
French energy prices fell for a fourth consecutive month, helping push consumer prices lower by 0.1 percent in May over the previous month. Compared to a year ago, prices were 0.7 percent higher, with the results matching preliminary and consensus estimates.
Energy prices fell 1.4 percent in May month-on-month, due to milder temperatures and higher output for renewable energy. From a year ago, prices are down 8.0 percent.
In broad terms, there are no substantial prices pressures even with food prices up 0.5 percent in May and 1.3 percent higher than a year ago. Manufactured goods were 0.1 percent more expensive than in April, while down 0.2 percent from a year ago.
Prices for services fell 0.2 percent in May and were 2.1 percent higher than a year ago. Respective declines of 5.2 and 4.2 percent for transportation and communications, in May helped offset a 0.4 percent gain in the more heavily weighted"other services" category.
Core inflation was also subdued in May, falling 0.1 percent while up 1.1 percent year-on-year. HICP which allows for comparison among European economies fell 0.2 percent on the month and rose 0.6 percent from May of last year.
Energy prices fell 1.4 percent in May month-on-month, due to milder temperatures and higher output for renewable energy. From a year ago, prices are down 8.0 percent.
In broad terms, there are no substantial prices pressures even with food prices up 0.5 percent in May and 1.3 percent higher than a year ago. Manufactured goods were 0.1 percent more expensive than in April, while down 0.2 percent from a year ago.
Prices for services fell 0.2 percent in May and were 2.1 percent higher than a year ago. Respective declines of 5.2 and 4.2 percent for transportation and communications, in May helped offset a 0.4 percent gain in the more heavily weighted"other services" category.
Core inflation was also subdued in May, falling 0.1 percent while up 1.1 percent year-on-year. HICP which allows for comparison among European economies fell 0.2 percent on the month and rose 0.6 percent from May of last year.
Market Consensus Before Announcement
The consensus sees no revision from the flash at minus 0.1 percent on month and up 0.7 percent on year.
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.
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.
