French consumers 'deeply pessimistic'

7th January 2004, Comments 0 comments

PARIS, Jan 7 (AFP) - French consumers remained deeply pessimistic in December and were less willing to spend, despite the traditional holiday shopping season, the national statistics body INSEE reported Wednesday.

 

PARIS, Jan 7 (AFP) - French consumers remained deeply pessimistic in December and were less willing to spend, despite the traditional holiday shopping season, the national statistics body INSEE reported Wednesday.

The beginnings of an apparently jobless economic recovery and inflation worries weighed on the French consumer, leaving confidence in a trough not seen for more than five years, excluding a decline last March over the Iraq war, analysts said.

A composite indicator of consumer confidence, adjusted for seasonal variations, stood at minus-30 in December, unchanged from the November reading, according to a monthly survey conducted by INSEE and published on the day the winter sales spree, vital to many retailers' annual sales figures, began.

In November the indicator had slipped a notch from minus-29 in October.The indicator represents the balance in percentage points between consumers having experienced, or expecting, a rise in their living standard and those seeing a decline.

Consumer spending, a key motor of the French economy, looked set to stay choked.

The INSEE indicator showing the inclination to buy consumer goods fell to minus-22 in December from minus-19 the previous month.

"At a time when the major stores and other retailers are heavily banking on winter sales to save their season, this weak appetite for spending is evidently a bad sign," Natexis Banques Populaires analyst Marc Touati said.

The INSEE report coincided Wednesday with the launch of semi-annual sales across most of the country.

Touati noted that consumers were brushing off official assurances that a European economic recovery is under way.

"Despite the announcements of a recovery by the government, INSEE and the ECB (European Central Bank), households still don't believe it. That said, if one excludes the floor reached last March 31, represents the lowest (confidence) level since May 1997."

INSEE said its December survey showed continuing concern about rising prices, but consumers were "a little more optimistic" about the future trend in prices, INSEE said.

However, Nicolas Claquin, an analyst at CCF, said that inflation worries were the major cloud in consumers' minds.

"For several months now, this lack of household optimism comes mainly from concerns about inflation. They have the impression that their financial situation and their quality of life are declining."

French inflation stood at 2.5 percent in November from the same month last year, compared with 2.2 percent for the 12-nation eurozone as a whole.

Claquin noted that inflation could get a new boost in January with a hike in tobacco prices.

"To these worries about prices are those about employment," he added.

© AFP

                                Subject: France news

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