France and Italy see prices fall

French consumer prices dropped 0.2 per cent in January compared to December, official data showed yesterday. The fall reduced the annualised rate of inflation to 1.8 per cent, from two per cent in the last month of 2010. Services, transport and communication prices unexpectedly declined 0.6 per cent on the month, weighing down the figures. Meanwhile, consumer prices in Italy also came under downward pressure. “We now expect the euro area’s ‘flash’ harmonised index of consumer prices to be revised down to 2.3 per cent (from 2.4 per cent) when it is published in its final form next Monday,” said Fabio Fois of Barclays Capital.