French final HICP inflation for February to confirm flash estimate

France’s final HICP inflation data for February to be released tomorrow is unlikely to see any change and confirm the flash estimate of -0.1% y/y, as compared with January’s 0.3% y/y. The flash release had stated that in February prices of all the major components weakened on a year-on-year basis, with energy component weakening the most, dropping to -6.8% y/y from -3.8% y/y. Food prices also continued to decline, dropping to 0.1% y/y from 0.4% y/y. Decline in prices of fresh foodstuffs  drove the fall in food prices.

Amongst core components, the manufactured products’ prices recovered on a month-on-month basis after the end of winter sales. Nevertheless, the monthly recover was unsuccessful in lifting the annual rate that weakened to -0.2% from -0.1%. Prices paid for services also fell to 0.8% y/y in February from 1.1% y/y in January. Insee’s data had stated that the offset of school holiday calendar should negatively impact the prices of services related to tourism in 2016.

“French HICP inflation is set to average 0.6% in 2016 and 1.6% in 2017. We expect the core metric to be 1.0% in 2016, before rising to 1.3% in 2017”, says Societe Generale.