French Inflation Rate Unexpectedly Drops, Ending Months of Gains

  • Price growth in France had hit fastest in 4 years in January
  • In euro area, inflation forecast to be 1.9% in February

Inflation in France unexpectedly slowed in February, ending months of acceleration that pushed the rate to a four-year high.

The slowdown to 1.4 percent from 1.6 percent compares with the median forecast of economists for a pickup to 1.7 percent. Food and energy prices recorded the biggest year-on-year increases in prices, according to the data published Tuesday by Insee.

Inflation has been slowly gaining pace across the euro area, with the average for the bloc expected to have hit 1.9 percent this month, effectively in line with the European Central Bank’s goal. Italy’s rate probably rose to 1.3 percent from 1 percent, while in Germany, the region’s biggest economy, it’s forecast to have hit 2.1 percent.

While headline inflation in the euro region is ticking up, the moves are largely due to energy prices. Underlying price pressures remain weak and the core inflation rate is just 0.9 percent, about half the ECB’s goal.

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