Annual inflation in France slowed to 0.9% in August, according to final data from the national statistics office INSEE on Friday. On a month-on-month basis, the Consumer Price Index (CPI) rose 0.4%, with both readings in line with preliminary estimates.
Energy prices declined 6.2% year-on-year in August, easing from a 7.2% fall in July. Food inflation held steady at 1.6%, unchanged from the previous month. Core inflation, which excludes volatile food and energy, softened to 1.2% compared to 1.5% in July. Meanwhile, the Harmonized Index of Consumer Prices (HICP) increased 0.8% annually and 0.5% month-on-month.
The PMI data painted a mixed picture of France’s economy. The Services PMI improved to 49.6 in June from 48.9 in May, edging closer to the 50-point mark that separates expansion from contraction. However, the Manufacturing PMI slipped further into contraction territory, dropping to 48.1 in June from 49.8 in May.
The combination of easing inflation and weak factory activity could reinforce expectations that the European Central Bank (ECB) will lean on policy support to aid growth, even as services activity shows tentative signs of recovery.
