Unexpected Drop in French Inflation

In a surprising turn of events, France's Consumer Price Index (CPI) experienced a significant decrease, with an annual rise of just 0.8% in February. This marks the first time since February 2021 that the inflation rate has fallen below 1%, as reported by INSEE, the country's statistical office, in a preliminary report released on Friday. The figure not only dropped from January's annual inflation rate of 1.7% but also fell short of analysts' expectations.

Key Factors Behind the Decline

The primary driver behind this unexpected drop was the notable decrease in energy prices, which saw a 5.7% reduction compared to the same month in 2024. On the other hand, tobacco prices experienced a sharp increase of 4.5%, and the cost of services rose by 2.1%.

Monthly Inflation Rates Remain Steady

On a monthly basis, the inflation rate remained unchanged in February. The Harmonized Index of Consumer Prices (HICP) was recorded at 0.9% year-on-year, maintaining stability from the previous month.