French Jan CPI down 0.3 pct from Dec, up 1.2 pct yr/yr

(Updating to add analyst comment)

PARIS (AFX) - The French consumer prices index for January showed a fall of 0.3 pct compared with a 0.2 pct increase in December, according to figures from the Insee statistics office.

Year-on-year CPI was up 1.2 pct against a 1.5 pct rise in December.

Economists polled by AFX News expected a 0.3 pct fall month on month and said CPI was seen up 1.5 pct over the year.

Underlying 'core' inflation, which excludes products with either regulated or highly-volatile prices, rose 0.2 pct in January, following a 0.2 pct increase in December.

Food and tobacco increased 0.3 pct on the month, manufactured goods were down 1.4 pct, and the services CPI was 0.2 pct higher.

The harmonised index of consumer prices (HICP), calculated to allow comparison with other EU members, was down 0.4 pct month-on-month and rose 1.4 pct over the year.

Analysts said the bigger-than-expected decline in the headline inflation rate was largely due to a sharp fall in energy prices, as well as seasonal discounting following the Christmas period.

This adds to the picture of softer inflationary pressures in the euro zone following recent weak inflation data out of Germany and may question the need for further interest rate rises by the European Central Bank (other-otc: CHPA.PK - news - people ), they said.

'The French data continues a string of recent figures, including the German CPI and PPI, which have painted a benign picture of the current inflation environment,' said Stuart Bennett, economist at Calyon.

'On the face of it the figures...raise question marks over the need for further ECB rate hikes,' he said.