France's harmonised consumer price inflation slowed in June to 2.0% year-on-year, according to preliminary figures released by statistics agency INSEE. The reading, which is adjusted to permit comparison across European Union countries, is the first monthly deceleration recorded this year and reverses a five-month run of accelerating inflation that began in January.
The June rate represents a notable decline from May's 2.8% pace and sits in line with the European Central Bank's stated inflation objective. The preliminary data also fell short of an average forecast of 2.3% from a poll of 17 analysts conducted by Reuters.
The primary factor behind the slowdown was a substantial monthly drop in energy prices. Energy costs fell by 5% month-on-month in June, a move led by lower petroleum product prices. Despite that monthly fall, energy inflation remains elevated on an annual basis at +11.2% after having risen sharply since the start of the Iran war.
Inflation in services moderated as well, easing to 1.8% in June from 2.1% in May. Manufactured goods continued to exert downward pressure on headline inflation, with prices in that category declining for a third consecutive month - deepening to -0.9% from -0.6% the prior month.
Because the data are preliminary, final readings may adjust slightly when INSEE publishes revised figures. The harmonised measure is used for cross-country comparisons within the EU and is the metric referenced in the European Central Bank's target framework.
Data snapshot
- Harmonised inflation (year-on-year): 2.0% in June, down from 2.8% in May
- Analyst consensus (Reuters poll of 17 analysts): average forecast 2.3%
- Energy - monthly change: -5%; energy inflation year-on-year: +11.2%
- Services inflation: 1.8% in June, down from 2.1% in May
- Manufactured goods: -0.9% in June, compared with -0.6% in May
These preliminary figures highlight a shift in the near-term inflation profile for France, with energy prices playing the dominant role in June's moderation. Market participants and policymakers will be watching subsequent INSEE releases for confirmation of the trend and for any revisions to the initial reading.