14 June 2004, 11:30  High oil prices spark French inflation surge

High oil costs propelled French consumer prices 0.4 percent higher in May, pushing the annual inflation rate on EU measurement norms to 2.8 percent, state statistics office INSEE said on Monday. The rise from an annual rate of 2.4 percent in April could give the European Central Bank a further reason to hold off on interest rates cuts demanded by many politicians. It was bigger than predicted by economists polled in advance by . INSEE said energy prices jumped 7.4 percent in the month in France and that oil prices rose 12.7 percent. "The ECB is rapidly going to get nervous," said Olivier Gasnier, an economist at French bank Societe Generale. The French data opened a key week of inflation reports on both sides of the Atlantic. "May's rise is mainly due to energy price increases, which is the result of a strong rise in world oil prices," INSEE said in statement.
Gasnier noted that the underlying consumer price index was not rising so fast, with a 0.1 percent rise in the month, and said this showed there was not too much to worry about on the inflation front apart from the problems caused by oil prices. The report comes ahead of a British producer prices publication later on Monday and of a key U.S. inflation readout on Tuesday. More consumer price data from the euro zone is due later in the week. The U.S. Federal Reserve is considering when it may start raising interest rates once again, and Europe is still debating whether interest rate cuts to nurture economic growth should take precedence over rate rises to contain inflation. Oil prices hit a 21-year high of $42 a barrel earlier in June on fears of terrorist attacks hurting production in Saudi Arabia, the world's leading oil producing state, but prices are now below $40.///

© 1999-2024 Forex EuroClub
All rights reserved