In February, the national French CPI measure came in at -0.3% yoy (0.7% mom) as expected after its reading of -0.4% yoy in January. Meanwhile, the HICP aggregate printed at -0.3% yoy from -0.4% in January. Fuel prices rose by 4.7% mom and hence were the main reason for this slight quickening. FR CPI ex tobacco came in at 125.37 (-0.3% yoy). Tobacco prices were stable as the rise on 13 January was already accounted for in the January report.
Energy prices rebounded as expected (2.1% mom) from -7.1% yoy in January to -5.3% yoy in February (adding 15bp to the headline). Food prices contributed as well to the higher inflation reading as fresh food prices inched higher mainly because of less favourable weather conditions than last year (adding 5bp to the headline).
Downward pressures came from manufactured products, in particular clothing and footwear, which fell from -1.0% in January to -2.6% in February (cutting 7bp from the headline).
This was attributed to the introduction of an additional week of sales in February which left prices lower than this time last year. Services price inflation remained stable (1.3%). The INSEE measure of core inflation (which differs from core HICP) metric slowed down once again from 0.2% yoy to 0.1% yoy in February.
"For the March HICP inflation reading, we expect a return to positive territory, albeit very tepid still, on the back of higher energy prices. The other components should remain broadly stable. We expect French HICP inflation to average 0.6% in 2015 and 1.4% yoy in 2016. The core component should average 0.7% in 2015 and 1.1% in 2016" said Societe Generale in a report on Wednesday.
