French Consumer Confidence Weakens

French consumer confidence weakened more than expected in February, after stabilizing in the previous month, survey data from the statistical office Insee showed Tuesday.

The consumer sentiment index dropped to its long-term average of 100 in February from 104 in January. Economists had expected the index to fall to 103, RTTNews reported.

Consumers’ expectations regarding their own financial situation over the next twelve months worsened notably to -19 in February from -13 in January. Similarly, the index measuring households’ opinion on past financial situation decreased to -22 from -16.

At the same time, the index households’ fears concerning unemployment remained unchanged at 4 in February. Households were slightly less numerous to expect prices to increase during the next twelve months, with the corresponding index falling to -20 from -17.

Consumers were more glum than January on just about every measure on which they were surveyed. They reported feeling worse about the future prospects for their personal finances and their ability to save, and significantly downgraded their view of their recent historical financial position.

There was an acute rise in the number of households perceiving rising inflation over the past year, and consumers were less cheery about the standard of living in France—although the reading remains above the long term average for the measure.

Claus Vistesen of Pantheon Macroeconomics suggested worries over inflation could be starting to bite as wage growth remains lackluster:

The main index was dragged down by sharp declines in consumers’ outlook for their economic and financial situation in the next 12 months. By contrast, consumers’ purchasing intentions and their “fear of unemployment” remained unchanged, consistent with decent growth in spending and a continued fall in unemployment.

Nominal wage growth remains weak in France, indicating that consumers are worried about maintaining their purchasing power which is a key economic gauge for French households and politicians.