French inflation slows

Following the fall in commodity prices and the credit crisis cooling economic growth, inflation in France has fallen.

Consumer prices are down by 0.3 percent from September and the inflation drop has been supplemented by the fall in oil, which is down by 60 percent as well as energy and food prices.

In France, inflation was at its peak between June and July of this year as it ran at 4 percent when a barrel of oil was a record $147.27.

Marc Touati, economist at Global Equities, said that given the fact that oil has continued to fall, as well as commodity prices, France may be less affected by the downturn in the global economy when compared to its German neighbours.

The Harmonised Index of Consumer Prices is down 0.1% compared to last month, although this has meant that domestic spending is down, not just in France but across the euro zone.

It is hoped that inflation will continue to fall as inflation caused by manufactured goods has reached its peak meaning that inflationary pressures will drop further.

The reduction of inflationary pressures in both France and across Europe means that the European Central Bank (ECB) is now in a position to reduce interest rates after European Commission indicated that the European economy is most likely to stagnate by 2009.

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