Thu Mar 15 02:45:00 CDT 2018

Consensus Actual Previous
Month over Month 0.1% 0.0% 0.1%
Year over Year 1.2% 1.2% 1.2%

The provisional February CPI was revised a tick weaker to stand unchanged versus January in the final data. However, the annual inflation rate remained at 1.2 percent, in line with its preliminary reading and 0.1 percentage points below its final mark at the start of the year.

The flash HICP was also unrevised and so still shows a flat monthly reading and a 1.3 percent rise on the year, down 0.2 percentage points from its January print.

Manufactured goods prices were 0.3 percent lower on the month and just 0.1 percent firmer on the year while services saw a 0.1 percent gain for a 1.1 percent annual rate. Seasonally adjusted, the CPI fell a monthly 0.3 percent after a 0.7 percent bounce in January, probably reflecting some timing issues with the seasonal adjustment process. The core CPI declined a slightly sharper 0.4 percent which was enough to shave a tick off its yearly rate which now stands at 0.8 percent.

Underlying trends in French inflation are still soft and in the wake of back-to-back falls in household goods spending in December/January, look set to stay that way for a while yet.

The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI represent the main rates of inflation. The national CPI is released alongside the HICP, Eurostat's harmonized measure of consumer prices. A flash estimate was released for the first time in January 2016 and is now published towards the end of each reference month.

The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. As a member of the European Monetary Union, France's interest rates are set by the European Central Bank.

France like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). The HICP is calculated to give a comparable inflation measure for the EMU. Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies.

Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.