French inflation falls faster than forecast

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Since October 2021, French inflation has fallen much lower than forecast

Overall eurozone inflation is expected to continue to ease when the figure is released next week.

Consumer price growth in the eurozone's second-largest economy slowed to 2.3 percent in March from 3.2 percent in February, according to figures released by the National Statistics Institute on Friday. Economists polled by Reuters had expected 2.8 percent.

The decline reflected slower annual price increases across all areas, including a decline in services inflation to 3 percent, energy inflation to 3.4 percent and a sharp decline in food inflation to 1.7 percent. Fresh food prices fell 3.9 percent in the year to March.

On a monthly basis, French inflation eased to 0.3 percent from 0.9 percent.

The figures, which come ahead of inflation data from Italy later on Friday, will confirm investors' bets that the European Central Bank will start cutting interest rates in June.

Spanish data released on Wednesday showed inflation in the eurozone's fourth-largest economy rose somewhat less than widely forecast, rising to 3.2 percent in March from 2.9 percent in February.

Spain's core inflation, which strips out energy and fresh food prices to give a better picture of underlying price pressures, fell to 3.3 percent in March from 3.5 percent in February.

Annual growth in consumer prices across the 20 countries that share the euro slowed to 2.6 percent in February, close to the ECB's 2 percent target.

However, rate-setters are still concerned that rapid wage growth in the labor-intensive services sector is pushing up prices further, where inflation slowed slightly to an annual pace of 3.9 percent in February.

Eurozone inflation has fallen sharply from its peak of 10.6 percent in October 2022, as disruption from the pandemic and Russia's invasion of Ukraine fueled the biggest price hike in a generation. This has raised hopes that the ECB will start reducing borrowing costs soon. After they raised their benchmark rate to a record 4 percent last year.

Senior ECB policymakers have signaled they may wait until June to check whether wage pressures have moderated enough to allow inflation to reach their target.