Final March Inflation Reading Confirms Softening Core Dynamics

France Final HICP data for March confirmed the flash reading on an annual basis at 2.4% Y/Y (3.2% Feb), though the non-seasonally adjusted M/M figure came in slightly softer than flash at 0.2% (0.3% flash, 0.9% Feb). Recall that the flash French Y/Y print was 0.4pp below-expected, and the first below 3% since September 2021, helping set the tone for a lower-than-consensus Eurozone-wide print the following week.

• This was a broadly disinflationary report: as was suspected upon the flash release, the slowdown in inflation was driven by both non-core and core components (a breakdown was not available in the flash).
• Core inflation slowed to 2.2% Y/Y (vs 2.6% prior), with a slight softening in services inflation to 3% Y/Y (vs 3.2% prior), with an unchanged non-seasonally adjusted monthly reading (0.1% M/M). Manufactured goods prices pulled back again, to 0.1% Y/Y (0.4% prior), with the smallest M/M increase since 2014 (1.5%, not seasonally adjusted).
• Similarly, food prices disinflated on an annual basis to 1.7% Y/Y (vs 3.6% prior) - the twelfth consecutive deceleration. in addition, energy prices continue to slow, with an increase in energy prices of 3.4% in March (vs 4.3% prior). Year-earlier base effects played a key role.
• Looking at the breadth of inflation, MNI's analysis shows that the proportion of components with inflation below 2% rose from 39% in February to 46% March - the highest since Feb 2022. Meanwhile, the proportion of components with inflation above 6% declined to 11% from 15% in February - the lowest level since January 2022.