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Core Disinflation Expected, While Policy Changes Add Headline Uncertainty

FRANCE DATA
France flash January inflation is due to be released at 0745GMT/0845CET today, with various Government policy changes expected to drive monthly rates among non-core components.
  • HICP consensus (bbg): 3.6% Y/Y (4.1% prior) / -0.1% M/M (0.1% prior)
  • CPI consensus (bbg): 3.3% Y/Y (3.7% prior) / 0.0% M/M (0.1% prior)
Analysts note that an increase in the excise tax on natural gas will increaseprices for households with fixed gas tariffs.
  • Barclays pencil in a +2.5% M/M increase in French gas HICP.
  • Nomura look for a larger +8.0% M/M rise.
  • Looking ahead, the French finance minister announced this month that the household electricity price cap will be increased by no more than 10% on Feb 1.

Additionally, an increase in tobacco duties of around 4% was implemented in January.

  • Morgan Stanley see this increasing headline inflation by 7bp overall.

Core inflation is expected to continue disinflating. Goldman Sachs expect "lowsequential package holiday, accommodation, and airfares inflation" to helpbring the M/M core rate to 0.16% M/M (vs 0.26% prior).

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France flash January inflation is due to be released at 0745GMT/0845CET today, with various Government policy changes expected to drive monthly rates among non-core components.
  • HICP consensus (bbg): 3.6% Y/Y (4.1% prior) / -0.1% M/M (0.1% prior)
  • CPI consensus (bbg): 3.3% Y/Y (3.7% prior) / 0.0% M/M (0.1% prior)
Analysts note that an increase in the excise tax on natural gas will increaseprices for households with fixed gas tariffs.
  • Barclays pencil in a +2.5% M/M increase in French gas HICP.
  • Nomura look for a larger +8.0% M/M rise.
  • Looking ahead, the French finance minister announced this month that the household electricity price cap will be increased by no more than 10% on Feb 1.

Additionally, an increase in tobacco duties of around 4% was implemented in January.

  • Morgan Stanley see this increasing headline inflation by 7bp overall.

Core inflation is expected to continue disinflating. Goldman Sachs expect "lowsequential package holiday, accommodation, and airfares inflation" to helpbring the M/M core rate to 0.16% M/M (vs 0.26% prior).

Keep reading...Show less