French inflation likely to remain stable in July

Following a rebound in HICP and CPI inflation in June, France’s inflation is likely to stabilize in July. According to a Societe Generale research report, France’s HICP inflation is likely to be stable at 0.3 percent year-on-year, whereas CPI inflation is expected to be at 0.2 percent year-on-year in July.

Downward pressure is expected to be put on inflation by the headline components as energy prices, following four straight monthly gains, are likely to drop in June. But, in spite of this weakness, the energy component is expected to record a slight lesser annual drop in July due to base effects, noted Societe Generale.

Furthermore, food prices are expected to ease thanks to seasonal factors. Even if the headline components are expected to ease, core inflation is expected to support inflation as non-energy industrial goods prices are likely to be stable on an annual basis but would register a month drop because of summer sales.

Core inflation is expected to rise marginally, owing to rise in services. Inflation in France is expected to rebound at a more rapid rate helped by base effects from energy prices in the future.