France falls back into deflation in February

France´s consumer price index declined by 0.2% year-on-year, after a rise of 0.2% in the month before, according to INSEE.

Economists had been expecting a flat reading.

Stagnant fresh food prices were the main culprit, with the year-on-year rate of change unchanged in February, down from a 1.8% rise in the previous month, Pantheon Macroeconomics highlighted.

Energy prices were also weak, falling by 6.8% year-on-year after a drop of 3.8% in the month before, as oil prices continued to prove a drag even as so-called positive 'base' effects faded.

INSEE does not release preliminary estimates for 'core' inflation.

Nevertheless, Pantheon Macroeconomics believed that while it likely dipped in February the trend over the whole of 2016 should be modestly higher, based on the lagged lift from stringer economic activity.

In harmonised terms, the headline rate of consumer price inflation slipped by 0.1% over the month following a rise of 0.3% in the month before.