French Inflation Cools; Economy Expands As Estimated

(RTTNews) - France's consumer price inflation softened in August on weaker growth in transport costs and the economy logged a faster growth as estimated in the second quarter, official data revealed Friday.

Consumer price inflation weakened marginally to 0.9 percent in August from 1.0 percent in July, provisional data from the statistical office INSEE showed. Economists had expected prices to climb at a steady pace of 1.0 percent.

Inflation, based on the Harmonized Index of Consumer Prices, gained 0.8 percent in August, while prices were forecast to grow at a steady pace of 0.9 percent.

The slight fall in inflation was driven by the slowdown in prices of services, particularly those of transport.

Food inflation held steady at 1.6 percent and services inflation eased to 2.1 percent from 2.5 percent. At the same time, energy prices logged a slower decline of 6.2 percent after falling 7.2 percent in July.

Meanwhile, the decline in manufactured product prices deepened to 0.3 percent from 0.2 percent.

Month-on-month, the consumer price index registered a 0.4 percent rise after July's 0.2 percent increase. Likewise, HICP inflation accelerated to 0.5 percent from 0.3 percent.

Final data is due on September 15.

Another data showed that producer prices in the French industry continued to increase in July. Producer price inflation edged up to 0.4 percent from 0.3 percent in June.

On a monthly basis, producer prices rebounded 0.4 percent after easing 0.1 percent in June.

The statistical office today confirmed that the second-largest euro area economy expanded 0.3 percent in the second quarter. This was slower than the 0.1 percent growth in the first quarter.

The expenditure-side of GDP showed that household consumption remained flat after a 0.3 percent drop. The sharp downturn in energy spending was offset by a rebound in spending on food products and accommodation services.

At the same time, the increase in government spending doubled to 0.4 percent from 0.2 percent. Gross fixed capital formation fell slightly again by 0.1 percent.

Exports rebounded moderately by 0.5 percent after a 1.2 percent fall, boosted in particular by a sharp rise in pharmaceutical exports. Imports accelerated sharply to 1.3 percent from 0.4 percent.

Finally, changes in inventories contributed 0.5 points to GDP growth after +0.7 points in the previous quarter.