| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.2% | 0.2% to 0.2% | 0.1% | -0.1% |
| Year over Year | 0.9% | 0.7% to 0.9% | 0.8% | 0.9% |
| HICP - M/M | 0.2% | 0.2% to 0.2% | 0.1% | -0.2% |
| HICP - Y/Y | 0.8% | 0.8% to 0.8% | 0.7% | 0.8% |
Highlights
Consumer prices are seen rising 0.1 percent in December after contracting by the same amount in November and stand 0.8 percent above their level of December of last year, according to preliminary estimates. In November, prices rose 0.9 percent year on year.
Economists were expecting a 0.2 percent month-on-month increase and a 0.9 percent year-on-year gain, according to the median of an Econoday survey of forecasts.
Energy prices are expected to extend their contraction, falling 6.8 percent year-on-year in December after falling 4.6 percent the month before. Services prices on the other hand increased 2.2 percent in December, the same rate as reported in November, while food prices will be 1.7 percent higher.
The Harmonized Index (HICP) used to normalize inflation comparisons among European countries is seen up 0.1 percent month-on-month and 0.7 percent year-on-year. Economists were looking increased of 0.2 percent and 0.8 percent monthly and year-on-year respectively.
The overall price environment has not changed much and inflation remains subdued in France and among the major European economies generally.
Market Consensus Before Announcement
The consensus looks for the first reading for CPI for December at up 0.2 percent on the month and up 0.9 percent on year after declining 0.1 percent on the month and rising 0.9 percent on year in November.
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.