France's annual inflation falls in March to lowest since 2016

PARIS (Reuters) - France's annual inflation fell more than expected in March to hit its lowest level since late 2016 as a government-imposed lockdown sharply restricted economic activity, data from the INSEE official statistics agency showed on Tuesday.

Consumer prices were unchanged in March for the second month in a row, giving an annual rate for the month of only 0.7%, according to a preliminary reading of European Union-harmonised data from INSEE.

That rate, down from 1.6% in February, fell short of the 1.1% expected on average in a Reuters poll of economists and was the lowest since November 2016.

The drop was driven by a plunge in energy prices and to a lesser extent lower prices for manufactured goods, INSEE said.

INSEE estimated last week that the economy was operating at two thirds of its normal level, which was likely to knock three percentage points off growth for each month in lockdown.

(Reporting by Leigh Thomas; Editing by Andrew Cawthorne)