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France: Inflation remains stubbornly low - BNPP

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 23, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at BNP Paribas, notes that the inflation remains uncomfortably low in France, even more so than economic growth and in November, the consumer price index (CPI) fell 0.2% m/m (non-seasonally adjusted) while on a y/y basis, inflation decelerated again, falling to 0%.

    Key Quotes

    “Inflation remains uncomfortably low in France, due to a combination of falling commodity prices and weak growth. This weakness is widespread: core inflation stood at just 0.7% y/y in November 2015. This is a source of concerns in several respects, but particularly on account of the deflation risk.”

    “Nevertheless, we believe the positive effects of low inflation (particularly support for household purchasing power) outweigh the negatives. Moreover, inflation is likely to be a little less weak by the end of 2016, when it is expected to stand at just over 1% y/y compared with 0% today.”

    “This upturn should stem mainly from the expected fading impact of lower oil prices, while inflationary pressures are likely to be contained. This limited upturn in inflation should not hold back the recovery. Nevertheless, we would prefer to see a higher inflation rate that had been caused by higher growth.”
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