Inflation in February dropped sharply to 0.8 percent year-over-year, the lowest since February 2021, down from 1.7 percent in January. This decline is primarily driven by a steep fall in energy prices, particularly electricity tariffs, which dropped by 15 percent. While service prices slowed, food prices increased, indicating that inflationary pressures remain uneven across sectors.

Consumer prices remained stable monthly, as a rebound in manufactured goods prices after winter sales was offset by falling electricity costs. Food prices dipped slightly, while services saw a modest acceleration, reflecting demand resilience in non-essential spending.

The harmonised index of consumer prices followed a similar trajectory, rising just 0.9 percent year-over-year, compared to 1.8 percent in January. This reinforced the broader disinflation trend across the Eurozone while it remained stable over the month.

With inflation below 1 percent, the key question is whether this signals a long-term easing of price pressures or if rising food costs and resilient service demand could trigger a rebound. Lower energy prices may provide relief, but consumer sentiment and wage dynamics will shape the inflation outlook. This latest update leaves the RPI at minus 14 and the RPI-P at minus 10. This means that economic activities are slightly behind market expectations of the French economy.

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.