Consumer prices were unrevised in the final report for February. A 0.1 percent monthly rise saw the annual inflation rate dip a tick to 1.2 percent, still 1.3 percentage points above its mark a year ago.
At the same time, the HICP was revised marginally firmer to show a 0.2 percent monthly increase although this was not large enough to impact the previously reported 1.4 percent yearly flash reading.
In fact, the modest deceleration in headline consumer prices masked a much steeper fall in the underlying index. Hence, while the seasonally adjusted overall CPI dropped 0.2 percent from January, the core index declined fully 0.4 percent. Underlying annual inflation was just 0.2 percent, down some 0.5 percentage points from January and its weakest posting in almost two years. The fall was mainly due to manufactured goods where prolonged winter sales saw prices drop a further 0.3 percent on the month in contrast to a 1.0 percent rise in February 2016.
The final data reinforce the impression of subdued price pressures in the French economy. Service sector inflation is creeping up but goods producers continue to struggle due to the softness of domestic demand. Economy-wide deflation risks may have eased but cannot be dismissed altogether.