French August inflation higher than expected, fuelled by energy

PARIS (Reuters) -French inflation accelerated more than expected in August as a new fall in food inflation was more than offset by higher energy prices, preliminary EU-harmonised official data showed on Thursday.

French consumer prices reached a 12-month inflation rate of 5.7%, up from 5.1% in July, the INSEE stats agency said.

A Reuters poll of 18 economists had an average forecast for the 12-month inflation rate of 5.4% with estimates ranging from 4.7% to 5.8%.

“This rise in inflation is due to a rebound in energy prices. Food prices eased (for the fifth month in a row) as well as those, to a lesser extent, of manufactured products and services”, the stats agency said.

Food prices were up 11.1% in August, versus +12.7% in July while energy prices, which fell by 3.7% last month, rose 6.8%.

While the decrease in food inflation will be welcome news for the government, which fears high food prices could undermine fragile consumer confidence, it is still almost twice the overall inflation rate.

High food prices are a concern for all European governments, with retailers and consumer goods groups trading blame.

After meeting top retailers on Wednesday, French Finance Minister Bruno Le Maire is due to hold talks with their industrial suppliers on Thursday to discuss how to accelerate price cuts.

The rise in energy prices was due both to an increase of oil products prices and to the partial removal of price caps on electricity prices, Insee said.

It also confirmed that France, euro zone’s second-biggest economy, grew 0.5% in the three months through to the end of June after expanding 0.1% in the first quarter.

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