French Consumer Confidence Falls in October as Inflation Worries Grow
As concerns about inflation grow, consumer confidence in France continues to decrease. Come check out our blog to learn more about the potential consequences of rising prices in the country.
Inflation in Europe has risen due to rising energy prices. French consumer confidence dipped below its long-term average in October as households worried about the potential impact of rising prices on their ability to save. In fact, oil prices rose in October to their highest level since 2014, helped by a global supply shortage and massive demand in the US, the world's largest consumer.
In the months leading up to the presidential election, the government, which has tried recently to cap energy and electricity prices, will pay close attention to this data. Prime Minister Jean Castex announced in October a 100 euro grant to help lower-income families cushion the pain of rising electricity and gasoline prices. In addition to the grant, France has also increased its voucher scheme to help households with their heating costs during the winter months and lower electricity rates.
October Reading
As reported by the official statistics agency INSEE, consumer confidence in France fell to 99 points in October from 101 in September. According to Reuters, 14 analysts had projected 101 for the October reading.
INSEE noted that many households reported feeling that prices would rise in its survey. At the start of October, data showed that inflation in the eurozone reached a 13-year high in September.
In September, consumer confidence in France increased by 3 points to 102, a three-month high and higher than the market consensus. Over the past twelve months, households were more likely to consider that France's standard of living will improve by 11 points than they were to think it would improve in the next twelve months.
Meanwhile, the measure of households' concerns about unemployment fell 13 points, while the standard of their future financial situation increased 1 point and that of their future ability to save increased 3 points.
Consumer Confidence in France
However, consumer confidence in France dropped to 99 in October of 2021, down from 101 in September. Some families reported cutting back on groceries, refueling their cars less, and using the heating less frequently to make ends meet.
As a result, confidence fell below forecasts of 101 and the long-term average of 100. Compared to last year, prospects for future personal financial wellbeing were lower. Expected savings capacity plunged, the standard of living also declined, future purchase intention declined, and unemployment and inflation rose.
On the other hand, a more encouraging aspect for President Emmanuel Macron is that consumer anxieties about unemployment have dramatically decreased as the economy recovers from the COVID-19 pandemic. Hopefully, French consumer confidence will stabilize on a more optimistic note before the end of the year.
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