RTTNews - Thursday, the French statistical office INSEE reported that the consumer price index dropped 0.5% year-on-year in June, after recording the first annual fall since 1957 in May. Prices were down 0.3% from last year in May. Economists were looking for a year-on-year decline of 0.4% for June.

Month-on-month, consumer prices rose 0.1% in June, after climbing 0.2% in the previous month. Economists expected a 0.3% increase in consumer prices.

The CPI excluding tobacco edged up 0.1% month-on-month, while it fell 0.5% from a year ago.

The harmonized CPI or the HICP declined 0.6% year-on-year in June, doubling the 0.3% fall recorded in the previous month. Economists were looking for a 0.5% drop. From May, the index moved up 0.1%. Euro area annual inflation turned negative for the first time on record in June. Prices in the 16-nation bloc fell 0.1% year-on-year.

Following the decline in consumer prices in May, Economy Minister Christine Lagarde said the French economy did not enter into deflation and the temporary decline in prices would support consumption given the rise in unemployment. However, most economists expect the headline inflation to remain negative in the coming months.

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