Article content
(Bloomberg) — French inflation slowed a little — reinforcing the European Central Bank’s decision to begin cutting record-high interest rates and offering an economic bright spot for President Emmanuel Macron two days before elections.
Consumer prices in the euro area’s second-largest economy rose 2.5% from a year ago in June after advancing 2.6% the previous month, the Insee statistics agency said Friday. The reading matched the median estimate of economists in a Bloomberg survey.
Article content
A separate release showed inflation in retreat in Spain as well. Price gains moderated to 3.5% from 3.8%, also in line with expectations, though a gauge of underlying pressures held steady.
While the ECB lowered borrowing costs this month, most officials are reluctant to plot a path for monetary policy amid elevated uncertainty over everything from wage growth to geopolitics.
Markets are betting on one or two more cuts in 2024 — a view some ECB Governing Council members endorse. As well as the French and Spanish data, investors will be able to assess inflation numbers from Italy on Friday, before Germany reports on Monday and figures for the euro zone as a whole arrive Tuesday.
In France, inflation slowed as food and energy price-increases decelerated. According to a national price index, inflation eased even more than in the harmonized reading, reaching 2.1% in June.
The cost of living is a major issue in the snap elections that start Sunday. Surveys show spending power and prices are top concerns, and the main parties have proposed steps including lower sales taxes and a higher minimum wage.
Article content
The vote is clouding the near-term outlook, with worries over policy shifts prompting investors to dump French assets and drive up borrowing costs. Consumer confidence is worsening, too, according to a monthly survey released this week, while there’s been a notable increase in inflation expectations and a decrease in the outlook for living standards.
Still, in better news for the current government, a separate release from Insee showed consumer spending rose 1.5% in May as households spent more on food and energy. Economists had forecast a 0.2% month-on-month increase.
—With assistance from Ainhoa Goyeneche and Joel Rinneby.
(Updates with Spain in third paragraph.)
Share this article in your social network
Source link
