France’s Consumer Price Inflation in May at 0.6%

France’s consumer price inflation in May stood at 0.6% year-on-year. This is a decline from 0.9% in April. The reading for May is also below the expectations of most economists. The target inflation rate of the European Central Bank (ECB) for the Euro zone is 2%. Expectation has therefore risen that the ECB will go for another interest rate cut in its June monetary policy meeting.

Decline in inflation rate driven by decline in energy prices

The decline in inflation in May was driven by decline in energy prices and prices of services. Services price inflation in May came down to 2.1% from 2.4% in April. Energy price inflation in May stood at – 8.1% year-on-year. This was a further decline from the – 7.8% level in April.  Continued decline in gas prices was the main driver of decline in energy prices.

But food price inflation in May increased to 1.3% from 1.2% level in April. A rate cut by ECB will give another much needed boost to the EU economy.

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Source: EuroStat