The pause recorded in French inflation in September was expected, as in most other Eurozone countries unfavourable base effects from energy prices were almost nil, BNP Paribas economist Frédérique Cerisier said in a note. That said, energy prices are expected to be the main driver of the rise in inflation in the coming months, the economist said.
Data released by INSEE on Tuesday showed that the consumer price index or CPI dropped 0.4% year-on-year in September, larger than economists expectations for a 0.2% decline. "After hitting a record low in July (at -0.7%), the inflation rate had started to rebound in August, at -0.2%," the economist noted.
The monthly evolution of prices, also contributed to the decrease in inflation, reflecting the weakness ofactivity and the related pressure on prices, said Cerisier. Month-on-month, the CPI declined 0.2% in September, in contrast to a 0.5% increase in the previous month. Economists had predicted a decline of 0.1%.
The BNP Paribas economist expects the inflation rate to resume an upward trend next month, notably due to strong energy base effects. "Inflation will be back in positive territory before the end of the year."
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