Thursday, February 19, 2015

Balances and lower prices … to a return of deflation? –

Balances and lower prices … to a return of deflation? –

France came in January inflation territory negative for the first time since late 2009, joining a trend at work throughout Europe, but one can already speak of a frank deflation .

The index of consumer prices in January posted a decrease of 0.4% compared to the same month in 2014, announced Thursday, February 19 the Insee, adding that France had not experienced negative inflation since October 2009.

This change-over-year price of a basket of consumer goods preselected is more commonly known as the “inflation.”

From December to January, a month hence, prices wavered even more clearly, 1%, according to preliminary figures from the National Institute of Statistics and economic studies, which assigns “essentially” the phenomenon discounts of the winter sales.

The prices of manufactured goods declined in January and 1.4% year on year and 3 2% over the month

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Another important factor in slowing inflation. the decline in energy prices observed continuously for six months. These prices declined in January by 7.1% year on year and 2.1% over the month.

France has joined the growing list of European countries that see consumer prices flinch yoy, from Germany to some developing countries facing protracted the phenomenon, such as Greece or Spain.

The euro area as a whole has known for two months negative inflation rates.

If this negative inflation, at first favorable to consumers were to continue several more months, France could slide into a pernicious phenomenon of deflation.

Deflation corresponds to a period of falling prices and wages sufficiently long to delay consumer purchases and discourage business investment. Once installed, this phenomenon crippling the economy is difficult to dislodge.

With a single month of negative inflation, France is not yet in this case, and a number of INSEE has allay concerns.

The so-called inflation indicator “underlying” closely watched by economists because calculated excluding the most volatile assets (including energy), and therefore supposed represent the underlying dynamic of the economy, has in fact increased slightly in January from 0.2% year on year.

(with AFP)


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