| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | -0.3% | -0.4% to 0.1% | -0.3% | -0.3% |
| Year over Year | 0.3% | 0.3% to 0.4% | 0.3% | 0.3% |
| HICP - M/M | 0.4% | -0.4% to -0.4% | -0.4% | -0.4% |
| HICP - Y/Y | 0.4% | 0.4% to 0.4% | -0.3% | 0.4% |
Highlights
Consumer prices declined 0.3 percent in January, while increasing 0.3 percent over a year ago, according to final figures. Both results match the preliminary result and the median of an Econoday survey of economists' forecasts. On a seasonally adjusted basis, prices fell by 0.1 percent month-on-month.
Core inflation which strips out volatile items fell by 0.2 percent during the month and stood 0.7 percent above year-ago levels.
The primary driver behind the month-on-month decline was a 1.9 percent pullback for manufactured products where other manufactured goods prices fell by 0.7 percent.
Prices for services which make up slightly more than half of the index fell 0.1 percent during January, with the largest decline coming from transportation services. These fell by 7.9 percent.
At the same time, food prices rose by 0.5 percent, all due to a 4.4 percent increase for fresh food, and something most likely to be immediately felt by consumers.
Finally, the measure used to compare inflation among European economies fell by 0.4 percent month-on-month and were up 0.4 percent from January of last year, a slowdown from December's 0.7 percent increase.
It's a recurring theme that inflation among European economies remains subdued and allows policy makers to consider other risks to price stability and economic growth.
Market Consensus Before Announcement
CPI expected unrevised in the final from the flash report showing CPI down 0.3 percent on month and up 0.3 percent on year in January.
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.