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French January consumer prices up 1.6 pc

PARIS: French consumer prices were unchanged in January compared with December but the annual inflation rate jumped to 1.6 percent from 1.3 as a late start to January sales failed to produce the discounts seen last year.

Data from national statistics institute INSEE released on Thursday showed lower prices for manufactured products especially clothes and shoes fresh food and public services offset further increases in energy prices and a sharp jump in the price of cigarettes.

Analysts expect seasonal price cuts to show up in the February figures after the government, which sets the start date for the six-week long sales, broke with tradition and opted for January 15 rather than the start of the month.

"I would expect to see some downward pressure on prices in January due to the sales, but they started later this year so the downward pressure is more likely to come through in February," said Philippe Brossard, economist at ABN Amro.

Economists said fourth quarter 1999 gross domestic product figures due on Friday were likely to confirm a picture of strong economic growth, but structural changes in the economy would stop inflation rising rapidly.

"International competition is pushing them (prices) down, and also deregulation in services, notably for instance in the telecommunications sector," said Olivia de Kersauson, economist at CCF.

Service sector prices fell 0.1 percent month-on-month in January, with the biggest decline in the telecommunications and transport sector which showed a 0.7 percent decline.

Oil prices that rose strongly in December showed more moderate gains in January, taking the edge off inflation in the energy sector.

Energy prices rose 1.1 percent month-on-month in January, compared with a 3.2 percent month-on-month rise in December.

Economists polled by Reuters expect France's economy to grow at around 3.4 percent this year, up from government figures of 2.7 percent in 1999.

French industrialists surveyed in February forecast stable producer prices in the early months of 2000, flattening after significant increases at the end of 1999.-Reuters