Inflation

03/09/2018

Core inflation excluding housing is lower in the US than in the euro area

By Eric Monnet and Angel Gomez

The difference in core inflation between the United States and the euro area is mainly due to housing rents. Since last year’s blogpost on the issue, this feature has become even more blatant: core inflation excluding housing rents is currently lower in the United States than in the euro area, whereas US core inflation is still much higher.

Chart 1: Core inflation vs. core inflation excluding housing rents (quarterly data). Sources: CPI (BLS) for the United States and HICP (Eurostat) for the euro area
Updated on 03/09/2018 16:01.
02/28/2018

The impact of oil prices on inflation in France and the euro area

By Yannick Kalantzis and Jean-François Ouvrard

A EUR 10 rise in the price of oil results in a 0.4% increase in consumer prices in France and the euro area. A significant part of this rise can be attributed to the non-energy components of the consumer price index. This indirect effect amounts to 0.1 percentage point in the euro area and 0.15 percentage point in France.

Actual inflation and inflation simulated with a constant oil price in the euro area (% change, yoy) Source: Eurostat, authors' calculations. Note: at each date, the oil price is assumed to be constant over the two previous years.
Updated on 02/14/2019 17:15.
02/22/2018

What is the outlook for negotiated wages in France?

By Erwan GAUTIER

Since 2008, growth in nominal industry-level wage floors in France has slowed progressively. In a near-zero inflation environment, wage floors have risen by less than 1% per year since 2014. Increases in negotiated wages are largely determined by past inflation and by changes in the national minimum wage (NMW). As a result, the upturn in inflation observed in 2017 could lead to slightly stronger growth in nominal negotiated wages in 2018.

Updated on 09/24/2018 10:35.
11/29/2017

The causes behind the France/euro area core inflation gap

By Louis de Charsonville, Violaine Faubert and Antoine Sigwalt

Since the start of 2016, French core inflation has been far below the euro area average. This gap can be attributed to the differences in economic fundamentals, such as the slower improvement in the labour market in France compared with that of the euro area as a whole, and, more recently, temporary shocks, such as the decline in the communications prices.

Updated on 09/24/2018 10:38.
10/31/2017

Low unemployment and low inflation in the United States: déjà vu?

By Gilbert Cette, Laure Frey and Gilles Moec[1]

The Fed attributes the current disconnect between a tight labour market and low inflation to transitory factors, while also acknowledging an unusual level of uncertainty. It is not the first time such disconnect appears. In the late 1990s already such configuration had triggered a debate on a structural downward shift in inflation. It later transpired that this assessment was based on erroneous data.

Updated on 09/24/2018 10:42.
10/18/2017

France-Germany: a lucid comparison of public sector payroll

By Marie Aouriri and Héloïse Tournoux

The public spending debate merits precise comparisons. The public sector payroll has been higher in France than in Germany by five percentage points of GDP for over 20 years. However it is overestimated by almost two percentage points as a result of hospital work that is not accounted for in Germany as public sector employment. With regard to education, more than one percentage point can be explained by demographics and organisational differences. Nevertheless, for the other government functions, there is still a significant difference, with France spending two percentage points of GDP more than Germany.

Updated on 09/24/2018 10:49.
08/23/2017

Why is inflation higher in the United States than in the euro area?

Vincent Grossmann-Wirth and Eric Monnet

Since 2012, the underlying inflation differential between the United States and the euro area has mainly been due to the vastly different role of rent in the two price indices. On average, this accounts for 70% of the differential, both in the euro area and in France. Property cycles must be taken into consideration when interpreting inflation differentials between countries.

Photo credit: Storylanding, The World Financial Center as seen from the Circle Line tour boat (wikimedia commons).
Updated on 08/13/2019 16:30.
05/10/2017

Towards a lasting recovery in euro area inflation?

By Caroline Jardet and Katja Schmidt

Inflation in the euro area (EA) is recovering. This recovery is explained by the sharp rise in import prices since the beginning of the year and by the steady improvement in the economic situation. In the absence of major shocks, inflation is expected to be around 1.8% in 2019 according to a Phillips curve augmented with import prices.

Updated on 09/24/2018 10:54.
03/30/2017

Services prices in France and oil prices

By Louis de Charsonville and Caroline Jardet

Services price inflation in France stood at 1.0% in 2016, well below its average from 1999 to 2015 (around 2%). This paper looks at the mechanisms through which the fall in oil prices and lower headline inflation have contributed to slowing services prices since mid-2014. An analysis of these interactions suggests that services price inflation will begin to recover as of 2017, to around 2%.

Updated on 09/24/2018 11:04.