U.S. Markets

French inflation surges to 1.6 percent in January

FILE PHOTO - Visitors walk in the Passage des Panoramas, the oldest of the covered passages built in 1799 and housing bars and restaurants, old postcard shops and philatelist boutiques, in Paris, France, November 18, 2016. REUTERS/Charles Platiau/File Photo

PARIS (Reuters) - French consumer prices rose at their fastest pace in more than four years in January, mainly because of the rise in crude oil prices which was amplified by an increase in taxation on fuels taking effect at the start of the year.

Prices fell 0.2 percent on a month-on-month basis, but this gave a year-on-year inflation rate of 1.6 percent, preliminary EU-harmonized data from the INSEE statistics agency showed on Tuesday.

The 12-month rate, the highest since October 2012 and up from an increase of 0.8 percent in December, exceeded economists’ average estimate for a reading of 1.3 percent as polled by Reuters, with expectations ranging from 0.9 percent to 1.5 percent.

A 10-percent yearly rise in energy prices was the main driver, INSEE said, while fresh food products rose 8.7 percent.

Benchmark crude oil prices hovered around $55 a barrel for most of January, while they had dropped as low as $27, a 12-year trough, in the corresponding month the year before.

On Jan. 1, France’s carbon tax increased to 30.5 euros per tonne of CO2 from 22 euros before, pushing up prices at the pump.

INSEE also said a later start this year to the regulated post-Christmas sale period, during which shops are allowed to discount their products below cost, boosted yearly inflation.

Separately, INSEE said producer prices rose 0.9 percent in December, giving a 12-month rate of 1.7 percent.

Reporting by Michel Rose and Leigh Thomas Editing by Jeremy Gaunt.