Favourable base effects lay behind a sharp deceleration in Inflation in March. With prices climbing a hefty 1.4 percent in March last year, a provisional 0.8 percent monthly increase in prices was small enough to see the annual rate drop from February's final 6.3 percent to 5.6 percent, just a tick above the market consensus and equalling its lowest post since May 2022.

The flash HICP largely followed suit, posting a 0.9 percent monthly gain that slashed its yearly rate from 7.3 percent to 6.6 percent, now some 4.6 percentage points above the ECB's target.

However, the hefty drop in the annual CPI rate was essentially just attributable to weaker energy where inflation slumped from 14.1 percent to only 4.9 percent. Overall manufactured products (4.8 percent after 4.6 percent) were actually slightly firmer and services (2.9 percent after 3.0 percent) marginally weaker while food (15.8 percent after 14.8 percent) continued to climb sharply. Consequently, the core rate (6.1 percent) in February was probably little changed.

The deceleration in French HICP inflation should be reflected in a marked fall in the overall Eurozone rate later this morning. Nonetheless, with the core component likely still far too strong, the ECB will not be impressed. Today's updates put the French ECDI at 21 and the ECDI-P at 10, both measures signalling a limited degree of overall economic outperformance, albeit largely due to strong prices.

Inflation in March is expected to slow to a 5.5 percent year-over-year rate versus 6.3 percent in February.

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.