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French PPI Composition And Evolution

Close to the French Consumer Price Index, the Producer Price Index provides insight about production prices variations for various categories of industrial products. Like the French CPI, data is updated each month by the INSEE, sub-aggregates are often reweighed (Last one was in 2010). The figure also represents a major KPI for France. Financial markets try to predict variations of the French PPI, and unexpected numbers can create relative volatility.

The number traditionally reported by media is the monthly base price variation of the global French PPI including producer price for domestic and external markets. Also, some other publications by the INSEE display the domestic prices after taxes and are often used for business purposes, like contract indexation. Another important indicator released at the same time is the imported industrial goods price index. It gives insights about the competitiveness of imported goods in France.

Global evolution of French PPI

Like the French CPI, the French PPI drops in Autumn 2008. Out of this, the global growth seems to be slower since April 2011, showing a relative stabilization of produced goods price. 2 major factors can explain this deceleration:

  • A stabilization of the price of raw materials.
  • A steady cost of labour in France.

Covered field and exceptions in the French PPI

The INSEE announced covering 99,5% of the domestic market and 99,1% for the outside market in the French PPI. INSEE civil servants perfom survey directly at French companies. In order to not twist results, the French PPI excludes some state-sponsored industrial sectors:

  • Nuclear fuel
  • Weapons
  • Planes, boats and space vehicles
  • Waste

Prices can also be voluntary maintained to artificial levels in these industries to meet very unique business needs. Without these sectors, the INSEE estimates covering the total economy at 94% for the domestic market, 86% for the externals.