(Bloomberg) -- French inflation slowed to its weakest level since September 2021 — reinforcing a trend that’s fueling debate on when the European Central Bank should lower interest rates.

Consumer prices in the euro area’s second-largest economy rose 3.1% from a year earlier in February, down from 3.4% the previous month and in line with a Bloomberg survey of economists.

Separate data showed inflation in Spain overshot expectations slightly, though it also eased — to 2.9% from 3.5%.

The releases will be followed later Thursday by Germany, which is set to report a softer reading, too. Early numbers from its individual states were broadly in line with expectations, according to Bloomberg Economics.

Data for the 20-member euro zone will round off the week on Friday, with analysts anticipating a moderation to 2.5% from 2.8%.

“The fight against inflation is being won,” French Finance Minister Bruno Le Maire said in a post on X, formerly Twitter. “By the end of the year, we should be close to our target of 2%”

The broad-based retreat toward the ECB’s 2% target comes as energy prices fall and Europe’s economy stagnates. Officials in Frankfurt, though, are cautioning against loosening monetary policy too soon, for fear of a resumption in price pressures. They’re particularly focused on wages and reckon they’ll only have a clearer picture by June’s rate meeting.

The concern is that large pay rises spur services inflation, which in France eased slightly to 3.1% in February from 3.2% the previous month, according to statistics agency Insee. Goods inflation, meanwhile, dropped to 0.3% from 0.7%.

French consumers aren’t convinced price pressures will continue to abate: A survey this week showed households’ expectations rose sharply in February.

The euro was steady at about $1.08, as the data did little to shift the market’s view on the scale and pace of ECB rate cuts this year. Traders are betting they’ll start in June, and are pricing just under one percentage point of easing by December.

Bloomberg Economics nowcasts for March predict inflation in France and Spain at 2.6% and 2.4%.

What Bloomberg Economics Says...

“Spanish price gains will continue to edge down over the rest of the year though it will be a bumpy descent, in part due to the government’s decision to gradually reverse energy tax cuts. That’s one reason why Spain’s inflation will be running higher than the wider euro area over 2024.”

—Ana Andrade, economist. CLick here for full REACT

A separate report from Insee showed French consumer spending fell 0.3% on the month in January as outlays on manufactured goods dropped 1.5%. Economists had expected a 0.2% decline.

Still, there was slightly brighter news on the economy last year as Insee revised up its reading for fourth-quarter gross domestic product to 0.1% from stagnation previously. 

--With assistance from Ainhoa Goyeneche, Rodrigo Orihuela, Joel Rinneby, Constantine Courcoulas and Andrej Sokol (Economist).

(Updates with German regional data, Bloomberg Economics nowcasts starting in fourth paragraph.)

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