Energy prices boost French inflation


France's inflation rate rose for the first time in three months in December as energy prices gained and consumer spending advanced.

However, speaking on French radio this morning, economy minister Christine Lagarde said she was not too worried by rising inflation.

Consumer prices based on European Union methodology increased 2 per cent from a year earlier, compared with a 1.8 per cent rise in November, Paris-based national statistics office Insee said today.

Economists had predicted a 2 per cent gain, according to the median of 11 forecasts in a Bloomberg survey.

Prices advanced 0.5 per cent from the previous month.

French business confidence increased in December as falling unemployment and growing investment helped lift domestic demand. Consumer spending advanced in November to the highest in more than seven years and industrial output rose at the fastest pace since January, a sign growth in the euro area's second-biggest economy may have accelerated in the final quarter of 2010.

European inflation accelerated 2.2 per cent in December, more than economists estimated, on surging energy prices. That pace exceeded the European Central Bank's limit of just below 2 per cent for the first time in more than two years.

The price of crude oil jumped 8.6 per cent in the last month of 2010, bringing the annual rise to more than 15 per cent.

French consumer prices based on national methodology increased 1.8 per cent in December from a year earlier and 0.5 per cent from the previous month, Insee said today.