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France HICP lower than expected

FRANCE DATA
  • French HICP data for March came in 4 tenths lower than expected at 2.4%Y/Y (2.8% consensus, 3.2% prior) with the M/M figure at +0.3%M/M (+0.6% consensus, +0.9% prior).
  • March's HICP was the first Y/Y print below 3% since September 2021.
  • The national CPI print also surprised to the downside by 3 tenths, coming in at 2.3%Y/Y (2.6% consensus, 3.0% prior).
  • The slowdown seems to be driven by both non-core and core components (we won't receive core CPI until the final prints). In particular there were base effects dropping out of the index for food and energy. But manufactured product prices saw their smallest March M/M increase since 2014.
  • Services CPI decelerated by two tenths to 3.0%Y/Y from 3.2%Y/Y (there is no core CPI in the flash release). On a M/M basis services CPI was broadly unchanged (it was +0.1%M/M in March 2023).
  • Manufactured product prices rose +1.3%M/M but this was less than the +1.5%M/M increase seen in March 2023, and the smallest M/M March increase since 2014. So there was a fall in the Y/Y print from +0.4%Y/Y in February to +0.1%Y/Y in March.
  • Food price inflation was flat on a M/M basis but base effects saw the Y/Y rate fall from +3.6%Y/Y in February to +1.7%Y/Y in March.
  • Energy prices were -0.6%M/M which reduced the Y/Y rate from 4.3%Y/Y in February to +3.4%Y/Y in March.
  • The French data appears to be the biggest surprise to prices data in the March round so far ahead of next week's Eurozone HICP release. It follows a slightly softer Spanish HICP print on Wednesday (+3.2%Y/Y versus +3.3% consensus, +2.9% prior). So together both of these releases point to weakness.
  • We will receive Italian HICP data at 10:00GMT / 11:00CET.
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