An overview of inflation in France
Inflation in France increased less markedly than expected, remaining significantly below the 2% target set by the European Central Bank. According to data provided by the statistics agency Insee, consumer prices increased by 1.7% year-on-year in November. This figure is lower than analysts’ expectations, who expected an acceleration to 1.8%. The current situation suggests that there may be further reductions in interest rates, an issue of great relevance to investors and consumers
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Analysis of sectors and prices
A more detailed analysis of the data reveals that services, a closely monitored sector, recorded a price increase of 2.5%. However, energy costs continue to fall, although at a slower pace than in previous months. This trend is significant, since energy costs have a direct impact on household purchasing power and consumer spending. In addition, recent data show an unexpected decrease in consumer spending in October, the first since June, with a decrease of 0.4% compared to the previous month
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Economic and political implications
These inflation figures come in a context of political turmoil in France, where a balance sheet stalemate next year triggered a sale of securities. The yield on 10-year French government bonds has reached worrying levels, matching that of Greece for the first time. Consumer confidence fell unexpectedly, reaching its lowest level since June. Forecasts for the entire euro area indicate an acceleration to 2.3%, but the situation in France could negatively influence these estimates. Gross domestic product growth, which registered a 0.4% increase in the third quarter, may not be enough to offset concerns related to inflation and consumer spending
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