French inflation steadies

Meat increased in price, while fresh food got cheaper

French inflation stabilised in June after jumping sharply the month before.

Consumer prices were unchanged in the month to June and were up 2.1% from a year earlier, according to the French national statistics agency INSEE.

"The figures are indicating that inflation is going down, but we have to be vigilant," said Bank of France governor Jean-Claude Trichet.

Jean-Claude Trichet: "We have to be vigilant"

Analysts said that the figures were better than expected and should bolster the French economy in the face of a US-led global slowdown.

However, the data is unlikely to affect the European Central Bank's interest-rate setting body, which has already indicated that it will leave rates unchanged at its next meeting, on 19 July.

In the month to May consumer prices jumped 0.7% and increased 2.3% on the year.

June prices

Prices for oil products, health services and new cars fell in June, after moving higher in May.

"This is rather good news," said Nicolas Claquin, economist at CCF bank.

"In the end, it's clear that when volatile pressures on energy and food recede, there is no underlying inflationary pressure in France."

The cost of fresh food also declined, although other food products, such as meat, rose 0.3% on the month and 5.1% on the year.

European gauge

According to a harmonised method of measuring inflation, which allows comparisons at a European level, French prices were unchanged in June and up 2.2% on the year.

Underlying inflation in France, which removes volatile prices, such as home loans, was up 0.1% on the month and up 1.5% on the year to June.