French inflation at lowest in 5 years in December

[PARIS] French inflation fell to its lowest in five years last month, data showed on Wednesday, piling more pressure on the European Central Bank to take action to fight deflation risks and spur growth.

The ECB is considering a hybrid approach that would see it buy government bonds with risk-sharing across the euro zone and, in a nod to German qualms, separate purchases by national central banks, sources familiar with the discussions have said.

French consumer prices rose 0.1 per cent month-on-month in December, giving a year-on-year inflation rate also of 0.1 per cent, the lowest since October 2009, EU-harmonised data released on Wednesday by the INSEE national statistics office showed. Prices were dragged down by a 4.6 per cent drop in oil products' prices.

Economists polled by Reuters had forecast no change up or down in the monthly or annual rate.

The euro zone's central bank might announce a sovereign bond buying programme as early as Jan 22 and will certainly have done so by March, according to all but one of 20 euro money market traders polled by Reuters on Monday.

REUTERS