FRANCE IS ABOUT TO ENTER INTO DEFLATION French inflation just sank to another five-year low, down at 0.4% in November, compared to the same month last year, leaving France even further away from the European Central Banks 2% inflation target.. Analysts were expecting a 0.5% figure. But its even worse than that. Frances core inflation is now at -0.2%. Its negative for the first time the country started recording it. Its much harder to blame falling oil prices for that: core inflation deliberately strips out volatile items like fresh food and energy, to try to give an idea of the underlying trend. NP Paribas economists had this to say in a note: Keeping in mind that the annual inflation rate still includes the impact of the early 2015 VAT hike, we should expect headline inflation to fall in negative territory early next year. France raised VAT to 20% from 19.6% in January, the effect of which has kept prices up all year. But from January, that effect will fall away, and combined with falling oil prices, deflation is now looking likely for Europes second biggest economy.
Posted on: Thu, 11 Dec 2014 10:02:54 +0000
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