French consumer prices dipped slightly in May as energy prices fell for the second straight month, according to figures released this morning.
The figures by statistics office INSEE, revised down from preliminary data showing prices flat, put year-on-year inflation rate at 1.8 per cent on an EU-harmonised basis.
The revised May inflation rate was well below a March peak of 2.6 per cent, when the US-led war in Iraq briefly forced up prices.
Overall energy prices fell 2.7 per cent in May, with fuelfalling 4.5 per cent. Town gas prices rose.
Elsewhere, prices in the dominant services sector rose 0.2per cent, taking the increase in the sector to 2.8 percentyear-on-year, INSEE said.
"We're in a situation where energy prices are still the mainfactor," said Philippe Waechter, chief economist at BanquesPopulaires Asset Management.
But given that inflation in the euro zone's biggesteconomies, Germany and France, was lower than in Italy andSpain, the latest fall in inflation did not guarantee a fresh cutin interest rates by the European Central Bank, he said.
The ECB slashed its euro zone growth forecasts this month toa maximum one per cent growth in 2003 and 2.1 per cent in 2004.