[ad_1]
A woman takes a selfie photo, with the Eiffel Tower in the background, at Surcouf street in Paris, on July 23, 2024, ahead of the Paris 2024 Olympic Games.
Mauro Pimentel | Afp | Getty Images
France’s harmonized inflation rate fell sharply in September, preliminary data from the National Institute of Statistics and Economic Studies (Insee) showed Friday.
Harmonized consumer prices in the euro zone’s second-largest economy came in at 1.5% in September, down from 2.2% in August. The Harmonized Index of Consumer Prices (HICP) is adjusted for comparison with other euro zone countries.
The HICP reading, which came in below the 2.0% expectations of economists surveyed by Reuters, is likely to ramp up pressure on European Central Bank (ECB) policymakers to take measures to stimulate the broader economy.
The ECB cut interest rates by 25 basis points to 3.5% earlier this month, resuming a rate-cutting cycle that started with a landmark move in June.
The euro fell on the news, before paring losses. It traded at $1.1165 at 1:30 p.m. London time, down around 0.1%.
Official data showed that a provisional estimate of France’s Consumer Price Index (CPI) came in at 1.2% in September, down from 1.8% in August.
Altogether, Insee said that the September drop in consumer prices represents the sharpest monthly fall since 1990.
Insee said that the sharp drop in inflation reflects a marked fall in energy prices, particularly those of petroleum products, as well as the seasonal effect of the fall in transport costs and the return to normal of certain tariffs in the wake of the Olympic and Paralympic Games.
Tobacco prices were expected to be virtually unchanged in September, compared to the previous month, Insee said.
Odds of another ECB rate cut ‘have risen’
Separately, Spain’s harmonized inflation rate fell to 1.7% in September, down from 2.4% in August, according to preliminary data published Friday by Spain’s National Statistics Institute (INE).
The reading was slightly lower than the 1.9% forecast by analysts polled by Reuters. Like France, Spain’s harmonized inflation rate came in lower than the ECB’s 2% target.
Spain’s preliminary CPI estimate, meanwhile, came in at 1.5% in September, down from 2.3% in August.
The sharp drop in France and Spain’s September inflation data has fueled expectations that the headline rate of the euro zone as a whole will reflect a steep drop to below the ECB’s 2% target.
Statistics agency Eurostat is scheduled to publish flash euro zone inflation data for September on Tuesday. Euro zone inflation dropped to a three-year low of 2.2% in August.
“Slightly lower core inflation in the euro-zone wouldn’t come as a big surprise to the ECB so would be unlikely to drastically alter policymakers’ thinking,” Franziska Palmas, senior Europe economist at Capital Economics, said in a research note.
“So for now we think that, on balance, the Bank is most likely to leave rates unchanged next month. But with the business surveys looking weak, the odds of a cut have risen,” Palmas said.
[ad_2]
Source link
