French July inflation to remain unchanged at 0.3% yoy

For the month of July, the weakness is expected in French energy component (due to a noticeable decline in gasoline prices alongside softer Brent prices) to exert downward pressure on the headline alongside softer food prices. 

"French HICP inflation is expected to remain unchanged at 0.3% yoy in July", says Societe Generale. 

The support is expected to come from the seasonal variations in the core component especially from services (as also seen in the euro area HICP) which islikely to offset the fall in the volatile components (food and energy). Prices paid for goods, which have shown improvement in the last few months, are expected to continue to show some improvement.

Additionally, despite the weaker euro, manufactured goods prices have shown no sign of quickening as other manufactured products (IT, housing equipment etc.) prices remained unchanged. 

The same was reflected in services inflation which also remained unchanged at 1.3% yoy. Predictably, seasonal variations in the upcoming summer season were seen, particularly in accommodation services (+2.7% yoy), holiday rentals (+0.9% yoy) and package holidays (+0.1% yoy from -0.4% yoy in May).

"Looking ahead, we expect French HICP inflation to average 0.2% in 2015 and 1.4% in 2016, while the core metric should average 0.7% in 2015 and 1.1% in 2016", added Societe Generale.