Unexpected Decline in French Inflation Rates

In a surprising turn of events, the French Consumer Price Index (CPI) witnessed an annual increase of just 0.8% in February. This marks the first time inflation has dipped below 1% since February 2021, as reported by INSEE, France's statistical office, in a preliminary report released on Friday. This figure represents a significant decrease from January's annual inflation rate of 1.7% and fell short of analysts' expectations.

Key Factors Behind the Decline

The primary driver behind this unexpected drop was the decrease in energy prices, which saw a 5.7% reduction compared to the same month in the previous year. In contrast, tobacco prices experienced a notable increase of 4.5%, and service prices rose by 2.1%.

Monthly Inflation Remains Steady

On a monthly basis, the inflation rate in February remained unchanged. The Harmonized Index of Consumer Prices (HICP) reported a year-on-year figure of 0.9%, consistent with the previous month's data.