According to the preliminary estimate of the French statistical institute (Insee), the rise in consumer prices reached its highest level since July 2012, at 2.3% over one year, after 2% in June. But in 2012, the economic situation was very different. The economy was under monetary and fiscal support and growth was 0.2% (against 1.7% expected this year with stronger fundamentals). Even if prices have fallen by 0.1 percentage point (pp) in France over the past month, mainly due to summer sales, on a year-on-year basis, they still rose by 0.3 pp in July. A spectacular progression… This situation is not unique to France. The whole Eurozone is experiencing a rise in inflation. The rise in prices reached 2.1% in July, said Eurostat. So, inflation is really back!
What explains this rapid rise in inflation? The oil counter-shock took place. Indeed, the price of a barrel of Brent oil rose from USD 52.5 to USD 75 over a year. In its wake, energy prices rose by 14.3% over the same period, details Insee. And fuel taxes rose sharply at the beginning of the year. The good news is that a peak has probably been reached according to Insee. Indeed, the French statistical institute expects a decline in the second half of the year. According to Insee, year-on-year inflation should fall to 1.7% by the end of the year. Because, unless there is aggravation of the crisis between Iran and the United States, the price of the black gold should stabilize. The price of the barrel fell by nearly 4% in July.
Julien Moussavi, Head of Economic Research – Sources: Beyond Ratings, Reuters