French Inflation Remains Stable; GDP Growth Confirmed At 0.5%

(RTTNews) - France's inflation remained stable in November and remained within the comfort zone of the European Central Bank and the economy logged a stronger growth as estimated in the third quarter, official data revealed Friday.

The consumer price index posted a steady increase of 0.9 percent in November, preliminary data from the statistical office INSEE showed. This was slightly slower than the expected growth of 1.0 percent.

Similarly, EU harmonized inflation stabilized at 0.8 percent in November, while prices were expected to climb 1.0 percent.

The stability of inflation should be attributed to a deceleration in service prices, primarily driven by communication services, and to a sharper decline in manufactured goods prices.

Services inflation softened to 2.2 percent from 2.4 percent in the prior month. Manufactured product prices decreased 0.6 percent after a 0.5 percent fall.

These effects were offset by a more moderate decrease in energy prices and a slight acceleration in food prices. Food inflation edged up to 1.4 percent from 1.3 percent and the decline in energy prices eased to 4.6 percent from 5.6 percent.

On a monthly basis, consumer prices edged down 0.1 percent, offsetting October's 0.1 percent rise. Similarly, the harmonized index of consumer prices slid 0.2 percent after rising 0.1 percent a month ago.

Another report from the INSEE showed that producer prices in the domestic market fell 0.8 percent in October from a year ago, after a 0.1 percent rise in September. Month-on-month, producer prices remained flat after a 0.1 percent drop.

The French economy grew at a faster pace of 0.5 percent in the third quarter, following a 0.3 percent rise in the second quarter.

Household consumption edged up 0.1 percent and government consumption rose 0.5 percent. Gross fixed capital formation increased anew 0.5 percent. Overall, final domestic demand excluding inventories contributed 0.3 points to GDP growth.

Exports advanced 3.2 percent and imports were up 1.3 percent. As a result, foreign trade contributed 0.6 points to GDP growth. Finally, the contribution of changes in inventories to GDP growth was -0.4 points.

In a separate communiqué, the statistical office said household spending grew 0.4 percent in October after a 0.3 percent rise in September. Energy consumption and food consumption growth accelerated, while spending on engineered goods remained stable.