| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.4% | 0.4% to 0.5% | 0.4% | 0.4% |
| Year over Year | 0.9% | 0.8% to 0.9% | 0.9% | 0.9% |
| HICP - M/M | 0.5% | 0.5% to 0.5% | 0.5% | 0.5% |
| HICP - Y/Y | 0.8% | 0.8% to 0.8% | 0.8% | 0.8% |
Highlights
Consumer prices rose 0.4 percent in August from July, led by higher prices for manufactured products and services. On a seasonally-adjusted basis, prices were unchanged in August, falling from a 0.2 percent increase in July. Compared to August of last year, prices were up 0.9 percent. Core inflation was unchanged on the month, while increasing 1.2 percent year-on-year, slowing from 1.5 percent in July.
Prices for manufactured goods was the primary driver of the increase, having gained 1.3 percent in August, somewhat of a payback for the 2.4 percent decline in July. Clothing and footwear prices were up 5.6 percent during the reporting month after a 9.3 percent contraction in July.
Energy prices fell 0.2 percent, helping mitigate a larger increase in the monthly number. From a year ago, prices were down 6.2 percent after falling 7.2 percent in July.
The Harmonized Index of Consumer Prices (HICP) used to compare inflation across European economics increased 0.5 percent in August and was up 0.8 percent from a year ago.
Overall inflation isn't a problem for Europe at present, which is one of the reasons the European Central Bank kept interest rates unchanged at its meeting yesterday. If anything, the risks are of the broader economy weakening. The relative absence of inflation will make it easier for the ECB to cut rates should the economy slow with stagflation not a current risk.
Prices for manufactured goods was the primary driver of the increase, having gained 1.3 percent in August, somewhat of a payback for the 2.4 percent decline in July. Clothing and footwear prices were up 5.6 percent during the reporting month after a 9.3 percent contraction in July.
Energy prices fell 0.2 percent, helping mitigate a larger increase in the monthly number. From a year ago, prices were down 6.2 percent after falling 7.2 percent in July.
The Harmonized Index of Consumer Prices (HICP) used to compare inflation across European economics increased 0.5 percent in August and was up 0.8 percent from a year ago.
Overall inflation isn't a problem for Europe at present, which is one of the reasons the European Central Bank kept interest rates unchanged at its meeting yesterday. If anything, the risks are of the broader economy weakening. The relative absence of inflation will make it easier for the ECB to cut rates should the economy slow with stagflation not a current risk.
Market Consensus Before Announcement
The consensus looks for no revision in the final report from the flash at increases of 0.4 percent on month and 0.9 percent on year for August.
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.
