FX.co ★ French Inflation Slowest Since Late 2021

The latest reports reveal that France's consumer price inflation decelerated to a two-and-a-half-year low in March. This slower pace is mainly attributed to modest increases in food and energy costs, according to the preliminary data from the French National Institute of Statistics and Economic Studies (INSEE).

Statistics show that in March, the annual growth rate of the consumer price index (CPI) was 2.3 percent, a decrease from the 3.0 percent observed in February. This inflation rate is the lowest since September 2021 when it was recorded at 2.2 percent, contrary to the predicted 2.6 percent escalation for March.

This annual downturn is representative of a decelerated year-on-year growth in various sectors such as food, services, tobacco, energy, and production of manufactured goods. Notably, inflation in the food sector reduced significantly to 1.7 percent from 3.6 percent. Concurrently, there was a slowdown in the growth of energy prices to 3.4 percent, a considerable fall from the previous month's 4.3 percent rise.

The growth in the prices of manufactured goods also declined to 0.1 percent from the previous 0.4 percent, while service costs rose by 3.0 percent, a slight decrease from the 3.2 percent increment in February.

On a monthly basis, the increase in the CPI was restrained to a mere 0.2 percent following a 0.9 percent hike in February. This figure was also below economists' anticipated growth of 0.5 percent.

Moreover, the harmonized inflation was dampened to 2.4 percent in March from the previous month's 3.2 percent. Contrary to expectations of a 2.8 percent reading, the harmonized CPI surged by a subdued 0.3 percent over one month, following a 0.9 percent rise during the preceding month. The final data related to this is expected on April 12.

Separate data provided by INSEE indicates that household expenditure remained static in February. The drop in energy consumption offset the increase seen in spending on food and manufactured goods. Projections had anticipated a modest rise in household consumption by 0.3 percent, following a 0.6 percent drop in January.

Moreover, the report also states that producer prices witnessed a drop for the third consecutive month in February. Prices within the domestic market fell by 5.5 percent, a sharp downturn from the 4.9 percent decline in January. Despite this, they remained 28 percent higher than their average level in 2021. In terms of monthly variations, producers' prices saw a 1.7 percent drop subsequent to a 1.0 percent decline in January.