French inflation accelerates in December to highest level in over four years on sharp rise in energy prices

French inflation accelerated to the highest level in more than four years. The year-on-year inflation gauged by the consumer price index accelerated to 1.4 percent in January 2017, according to the provisional estimate showed by INSEE.

This rapid rise is mainly driven by sharp rise in energy prices, attributed to the increasing prices of Brent crude and to a rise in taxation of petroleum products. Furthermore, prices of food and services have also increased significantly. Lastly manufactured product prices have dropped less sharply when compared to December.

On a sequential basis, French inflation has dropped 0.2 percent in January after rising 0.3 percent in the prior month. This fall is mainly due to seasonal decline in manufactured product prices, particularly those of clothing and footwear. But this fall is less strong than in January 2016. This is mostly due to the winter sales that started later in the year. However, the sharp rise in energy and food prices ease the overall drop in the month.

The Harmonised Index of Consumer Prices on a year-on-year basis has accelerated to 1.6 percent in January. On a sequential basis, inflation gauged by HICP dropped 0.2 percent in the month after rising 0.3 percent in December.