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French Inflation Hits Highest Level in Almost Three Years

French Inflation Hits Highest Level in Almost Three Years

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French inflation rose to its highest level since late 2018 as food and energy costs accelerated and manufactured goods prices rebounded with the end of the sales season.  

August’s 2.4% year-on-year increase in consumer prices in the euro area’s second largest economy is above the European Central Bank’s 2% target and also beats the median 2.1% estimate predicted by economists. 

French Inflation Hits Highest Level in Almost Three Years

The French data comes after Germany recorded the strongest rate of inflation since 2008 and ahead of a publication for the euro area later Tuesday that’s also expected to show inflation in the currency bloc as a whole running above the ECB’s target. 

Still, policy makers have said the stronger inflation will be a temporary phenomenon in Europe, indicating a change in the expansionary policy is not on the cards.

Data in France also showed that consumer spending fell 2.2% in July from June, an unexpected drop as households cut back on manufactured goods purchases. A sharp decline in car sales contributed to the weak reading.

In a separate publication, French statistics agency Insee revise up the reading for economic output in the second quarter to 1.1% from 0.9% due to the incorporation of new data.

©2021 Bloomberg L.P.