(Reuters) – Inflation in France fell in May at its lowest level since December 2020, driven by a more marked drop in energy prices and a slowdown in services costs, according to preliminary data published Tuesday by INSEE.

The consumer price index harmonized according to European standards (IPCH), which allows comparisons with other countries in the euro zone, established +0.6% over a year in May, against an estimate at +0.9% and after an increase of 0.9% in the previous month.

This slowdown marks the lowest inflation rate recorded this year and the lowest since December 2020.

In May, services prices increased by 2.1% over a year, after an increase of 2.4% in April. INSEE attributes this slowdown to the drop in transport prices and to a more marked withdrawal of those of communications.

Energy prices dropped 8.1% compared to May 2024, after a decline of 7.8% in April. It is the fourth consecutive month of decline, driven by the prices of petroleum and gas products.

Food prices increased by 1.3%over one year, a slight acceleration compared to April (+1.2%), while the prices of manufactured products remained in negative territory at -0.2%, unchanged from the previous month. Tobacco price inflation remained stable at 4.1%.

Over a month, the IPCH index would have dropped unexpectedly to -0.2% after an increase of +0.7% in April and +0.1% expected by consensus.

The consumer price index (IPC), inflation calculated according to French standards, would increase by 0.7% in May after +0.8% in April and while analysts awaited +0.9%.

Over one month, consumer prices would drop by 0.1% after an increase of 0.6% in April, and while analysts were +0.1%.

(Written by Elena Smirnova, edited by Augustin Turpin and Blandine Hénault)

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