Inflation continues to stabilize at a very low level

In October, overall inflation stood at 1.2% year-over-year, a level similar to that of September. This trend suggests that disinflation could be sustained, with inflation likely to remain below 2% in the coming months.
 

Inflation Remains Low at 1.2% in October
Inflation remained low at 1.2% year-over-year in October, following 1.1% in September. Prices continue to be driven by services, while energy and manufactured goods prices continue to fall.
 

Consumer Price Trends
Between October 2023 and October 2024, consumer prices rose by 1.2% in France. On a month-over-month basis (between September and October 2024), they increased by 0.2%. The inflationary shock now appears to be behind us, aided by the decline in oil prices since this summer, falling prices in the manufacturing sector, and lower inflation in the services sector.
 

Breakdown of inflation components
Energy prices fell by 2.0% in October, due to lower oil prices. Food inflation remained at 0.6% (compared with 0.5% in September), and the price of manufactured goods fell by 0.2% year-over-year, following a 0.3% decline in September. The trend is also positive in the services sector, where inflation fell to 2.2% in October, down from 2.4% in September. This means that wage increases, which are now less vigorous, are beginning to be reflected in production costs and, consequently, in service prices.
 

Deflationary Outlook
Deflationary pressures remain strong, and inflation is expected to stay below 2% in the coming months. The decline in oil prices—which is likely to be sustained—along with positive developments in the industrial and service sectors, provide grounds for optimism.
 

Impact of the Conflict in the Middle East
With the conflict in the Middle East—particularly Israel’s attacks on Iran—there were fears that oil prices would rebound. That did not happen, largely because Israel did not target Iranian oil facilities. The economic slowdown in China and rising crude oil production in the United States, Canada, Brazil, and Guyana continue to weigh on prices.
 

Disinflationary Trend in Industry
The disinflationary trend continues in industry. Producer prices (ex-factory) fell by 5.8% year-over-year in September (a figure published one month behind consumer prices) following a 5.1% decline in August, indicating that the decline in prices for manufactured goods is likely to be sustained.
 

Inflation in the Services Sector
Inflation is expected to continue to ease in the services sector. The production of services is primarily labor-intensive. Production costs—and thus prices—are therefore highly dependent on wages. Since falling inflation leads to a slowdown in wage growth, inflation in the services sector is expected to continue to decline in the coming months.
 

(source: Asteres)