Inflation cools in Germany and France as food and energy prices fall

The European Central Bank is reflected in the river Main in Frankfurt, Germany, Thursday, March 21, 2024.
The European Central Bank is reflected in the river Main in Frankfurt, Germany, Thursday, March 21, 2024. Copyright Michael Probst/Copyright 2024 The AP. All rights reserved
Copyright Michael Probst/Copyright 2024 The AP. All rights reserved
By Indrabati Lahiri
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German and French inflation numbers both fell in March, primarily due to declining food and energy prices, leading to more hopes of inflation soon returning to the ECB’s 2% target.


Germany’s year-on-year inflation for March 2024 was released on Friday morning, clocking in at 2.2%, according to the Federal Statistical Office. This was a step down from February’s 2.5%, while also being the lowest figure since May 2021.

This was mainly due to food inflation seeing the first decline since February 2015, sliding to -0.7% in March, from 0.9% in the previous month. Similarly, energy prices also fell at a faster rate, to -2.7% from -2.4% in February.

Goods inflation also reduced to 1.0% in March, down from 1.8% in the previous month. However, services’ prices increased from 3.4% in February, 3.7% in March.

Core inflation, which does not take into consideration energy and food prices, dropped to its lowest figure since June 2022 in March, at 3.3%.

Month-on-month inflation in March inched up 0.4%, the same as in February.

Germany’s March inflation report has fueled more investor hopes that the country’s inflation will soon come down to the European Central Bank’s 2% target. This could go a long way in helping support economic recovery and reduce the cost of living in Europe’s second-largest economy.

French inflation falls to lowest since September 2021

The French year-on-year inflation report for March 2024 also came out on Friday, coming in at 2.3%, according to INSEE France, which was the lowest number since September 2021. It was also a considerable reduction from 3% in February, and below analyst expectations of 2.6%.

As in Germany, France’s inflation decrease was also primarily due to food prices coming down, clocking in at 1.7% in March, down from 3.6% in February. Services inflation fell to 3% from 3.2% in the previous month, while energy inflation slid significantly to 3.4% from 4.3% in February.

Inflation for manufactured products also fell to 0.1% from 0.4% in the previous month, with tobacco prices following the same trend, declining from 18.7% in February to 10.7% in March.

Month-on-month, French inflation rose 0.2% in March, from 0.8% in March, primarily because of falling energy prices.

Spain’s March inflation print rebounds from six-month lows

In March, inflation in Spain saw an uptick from the six-month lows seen in February, clocking in at 3.2%, up from the previous month’s 2.8%, according to the National Statistics Institute (INE). This was mainly due to increasing utilities and house prices, which saw a rise of 1.5% from February’s -2.7%.

Transportation prices also surged to 2.9% from 2.4% in the previous month, while culture and recreation prices advanced 3.8% in March from 2.8% in February. However, prices fell for food and non-alcoholic beverages, to 4.3% from 5.3% in February.

Month-on-month, March inflation rose 0.8% from February.

Spain has been dealing with comparently sticky-high inflation in the last few months, due to services mark-ups being relatively elevated, as well as productivity falling especially in the open sector.

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