Inflation continued to decline in March. A final 0.5 percent monthly rise in the CPI was in line with the provisional estimate and left the yearly rate at 2.2 percent, just 0.1 percent below its final March print and matching its weakest mark since August 2021.

The flash HICP was similarly unrevised and so still shows a 0.6 percent monthly rise that left its annual rate stable at March's final 2.4 percent, only 0.4 percentage points above the ECB's target.

The dip in the annual CPI rate reflected lower inflation in manufactured goods (minus 0.1 percent after 0.1 percent) and food (1.2 percent after 1.7 percent). Energy (3.8 percent after 3.4 percent) provided a partial offset while services (3.0 percent) were only flat. As a result, the core rate eased from 2.2 percent to 1.9 percent, its lowest post since January 2022.

Confirmation that both headline and core French inflation are still moving in the right direction will leave financial markets all the more confident about a cut in ECB interest rates in June. Even so, Governing Council members will note with caution the relative stickiness of prices in the services sector. Today's update puts the French RPI and RPI-P at 25, both measures showing overall economic activity performing more strongly than expected.

No revisions are expected to the provisional data, leaving the yearly CPI inflation rate at 2.2 percent, down from March's final 2.3 percent.

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.