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French CPI almost flat, investment seen plunging

Published 05/13/2009, 03:25 AM
Updated 05/13/2009, 03:32 AM
SOGN
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PARIS, May 13 (Reuters) - French consumer prices were almost flat in April, up 0.1 percent month-on-month and year-on-year, while business leaders forecast investment in industry would plummet by 18 percent in 2009, statistics office INSEE said.

The EU-harmonised inflation figures were slightly below consensus forecasts for increases of 0.2 percent month-on-month and year-on-year.

Non-harmonised data for all households in France and its overseas territories showed energy prices dropped by 13.8 percent in April compared with the previous year, due to a global slump in oil prices seen since then.

Energy was the only category that saw a year-on-year drop.

"I think this precedes a period of negative inflation that is likely to last around five or six months, due to a strong negative base effect caused by last year's rise in oil prices," said Olivier Gasnier at Societe Generale.

In a separate, quarterly survey, INSEE found business leaders' expectations of investment in industry had worsened over the past three months.

They were now expecting investment to plunge by 18 percent in 2009, compared with a forecast of -12 percent when they were last asked in January.

In separate data, the Bank of France said France's current account deficit widened to 2.2 billion euros in March. (Reporting by Estelle Shirbon, Vicky Buffery and Francois Murphy, editing by Mike Peacock)

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