French inflation cools more than expected in September as energy prices, transport costs decline

France’s harmonized inflation rate fell sharply in September, preliminary data from the National Institute of Statistics and Economic Studies (Insee) showed Friday.

Harmonized consumer prices in the euro zone’s second-largest economy came in at 1.5% in September, down from 2.2% in August. The Harmonized Index of Consumer Prices (HICP) is adjusted for comparison with other euro zone countries.

The HICP reading, which came in below the 2.0% expectations of economists surveyed by Reuters, is likely to ramp up pressure on European Central Bank (ECB) policymakers to take measures to stimulate the broader economy.

The ECB cut interest rates by 25 basis points to 3.5% earlier this month, resuming a rate-cutting cycle that started with a landmark move in June.

The euro initially fell to a session low of $1.1143 on the French inflation news. It was at $1.1126 at 8:38 a.m. London time, down around 0.45%. 

Official data showed that a provisional estimate of France’s Consumer Price Index (CPI) came in at 1.2% in September, down from 1.8% in August.

Altogether, Insee said that the September drop in consumer prices represents the sharpest monthly fall since 1990.

Insee said that the sharp drop in inflation reflects a marked fall in energy prices, particularly those of petroleum products, as well as the seasonal effect of the fall in transport costs and the return to normal of certain tariffs in the wake of the Olympic and Paralympic Games.

Tobacco prices were expected to be virtually unchanged in September, compared to the previous month, Insee said.