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Inflation rebounded in French and Spain.

 

Inflation index
French con­sumer prices rose 7.2 per cent in the year to Feb­ru­ary, driven to the highest rate since the euro’s launch in 1999 by faster increases in food and ser­vices prices. A Reu­ters poll of eco­nom­ists had expec­ted French infla­tion to stag­nate at Janu­ary’s 7 per cent level. Instead, span­ish con­sumer prices grew in Feb­ru­ary, accel­er­at­ing to 6.1 per cent from 5.9 per cent in Janu­ary and above expect­a­tions for a fall to 5.5 per cent, des­pite Mad­rid cut­ting food taxes in Janu­ary. European gov­ern­ment bond prices fell in response yes­ter­day, send­ing the yield on Ger­many’s rate-sens­it­ive two-year bond up 0.08 per­cent­age points to 3.15 per cent, its highest level since the 2008 fin­an­cial crisis.

The fig­ures sug­gest euro­zone infla­tion might be more per­sist­ent than hoped, ahead of Feb­ru­ary price growth data for the bloc out tomor­row, which eco­nom­ists expect to show a slow­down to 8.1 per cent, from 8.6 per cent in Janu­ary. Sharp drops in whole­sale energy prices after a mild winter and reduced fuel con­sump­tion have helped euro­zone infla­tion to fall rap­idly from its Octo­ber record of 10.6 per cent. But it is unclear how quickly price growth will slow to the ECB’s 2 per cent tar­get. That would take the bench­mark rate to 3 per cent, up from minus 0.5 per cent last July, and swap mar­kets are pri­cing in fur­ther increases to just below 4 per cent by the end of the year.

French infla­tion was mainly driven by faster growth in food and ser­vices prices, while energy infla­tion fell des­pite a 15 per cent rise in the reg­u­lated elec­tri­city tar­iff this year. The core infla­tion rate, which includes pro­cessed foods, rose from 5.6 per cent to 5.8 per cent. The month-on-month growth is in French con­sumer prices accel­er­ated to 0.9 per cent from 0.4 per cent in Janu­ary.

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  1. Felicia1 March 2023 at 14:27

    I don't think we will see 8.1% tomorrow. Probably 8.3% or even more. It will take some time for it to reach 8.1%. 2023 will be a year where these numbers will bounce up and down every few months.

    ReplyDelete
  2. Clark1 March 2023 at 16:40

    I wonder why French energy inflation fell despite the 15% rise in prices? What happened there?

    ReplyDelete

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